If you are doing the envelope system & need help getting started with your envelopes, you’ve come to the right place. 🙂
In order to do the envelope system I recommend you do your budget first. I’m not sure what it’s called, zero-based budget maybe? It took us a few months to figure out & I probably did it the hard way because I’m a nerd like that. Over the course of a year I wrote down every single thing we bought and put it into categories like house, restaurant, entertainment, necessities, car upkeep, etc. This was great to see what we spent but it sucked because it only showed what we spent. Our money was still managing us and we needed to be managing our money. SO, starting in August when we got paid we sat down together & spent our money on paper before actually spending it. Here is a sample:
$1500 for the month
-$150 for giving (10% of your income)
– $400 for house payment
-$50 for electric
-$40 for water
-$100 for cell phones
-$50 for student loan #1
-$63 for student loan #2
This completes your ‘bills’ and you now have $647 left over to fund your envelopes
-$300 for groceries
-$200 for gas
-$40 for car upkeep
-$107 for blow money
If you subtracted all of that from $1500 your balance should be ZERO. Great job!
What do you do if your car breaks down? You have your emergency fund to help you. What do you do if you have to buy your dad a birthday present? You rearrange your envelopes so that you have $ every month for ‘gifts’. What if you don’t have enough money to fill all the envelopes that you want? Get a 2nd job or cut out your extras! There is plenty of time for whining, but here is not the place to do it. You have to take control of your money.
Since October & deciding to get rid of our debt quickly we have cut out certain envelopes and halfed others. If you are not sure what envelopes to have, here are the ones we currently have:
Groceries(fruit, vegetables, meat, everything) ($425)
Necessities (tissues, razors, detergent, humidifier filter) ($55)
Jared’s medicine ($15)
Restaurants for Dinner ($50)
Baby Stuff (new car seat/wipes/educational toys) ($50)
Truck Upkeep (registration, car wash, oil changes) ($30)
Car (We need a 2nd vehicle eventually) ($300)
Gifts (Birthdays/baby showers/including christmas) ($120)
Clothes/Shoes (for all 3 of us) ($60)
Entertainment (bowling/movies/dvds/magazines/concerts) ($55)
Blow Money (Because you will need this!!) ($100) We are using this as sort of a mini emergency fund. If we forgot to add something into the budget that month or needed it for anything. If we don’t use it though, it can be an extra $100 towards our debt. Of course if we were not on baby step #2, we might use it for a vacation or to save up for a new camera or lens or whatever. This is your category to ‘blow’, you just have to have an envelope for it. It makes you feel like you have more freedom.
To some, this is just a bare minimum of a budget and to others it’s way more than they could imagine. I feel we are blessed to be able to have this many envelopes each month & I’m content with them for now. This past week I had the privilege of using our ‘clothing’ envelope. We had a 30% off coupon so I thought it would be a great time to get some winter clothes for me. Jared has a ton so he didn’t need anything & he left the whole envelope up to me. (What a sweet husband :)) I shopped a lot smarter than previously. I made sure to only buy what I LOVED and that could go with work or for my SAHM days. I got everything I wanted & came out under budget! With sales & clearance plus my 30% off I saved $180! I only spent $99. I have some pants I need to get altered to wear & I want a pair of boots & that will complete my wants for clothing. Luckily, Jaidan has gift cards from his birthday if he needs anything. The point of telling you about my shopping spree was that I KNEW how much I could spend because it was in my envelope. I didn’t feel guilty about spending the money because it was specifically for that! I didn’t have to worry if I spent too much or if I was spending our grocery money on clothes. It felt AWESOME! Oh the freedom of letting your money accumulate in your envelopes to spend when you need.
Everyone has a different story to tell, this is just our story of God leading us out of debt & closer to financial freedom through Dave Ramsey’s Financial Peace University! I encourage you to start your own story! 🙂