The Envelope System

Like most women, I am in charge of a good portion of our family's budget. Mainly, this is because I know intimately the ins and outs of what things will cost, and who needs what, and what events are coming up. My husband is informed on a need-to-know basis because he has a lot on his plate, and also because he trusts that I am running things smoothly and efficiently.

A while back I noticed that even though I get a good chunk of my husbands paycheck each pay period I wasn't too sure where it all went. I always had just enough to cover our expenses, but started questioning if I couldn't do things better. So began the envelope system.

Every Monday before I receive my 2 week stipend I plan out upcoming events. I create an envelope for that event, place cash in the envelope, and use only that money for that event. When the money runs out - it runs out. No using my debit card for that last minute purchase or to cover an overage in one category. This system has really helped me to be thoughtful in how I spend our family money, but also helped me to see where it is going. I keep track of every penny I spend.

For example this last pay period looked like this:

 

Groceries - Week 1

Groceries - Week 2

Miscellaneous -

Superbowl -

Tolls -

Birthday -

Valentines Day

Thrift Store

Family Management Book Copies

Gas

Dog Food

Savings

Soccer Fees

Eye Doctor

We had some family over for a little Superbowl party. So, I brought the envelope labeled 'Superbowl' to the grocery store with me, and used only that money for items I needed for that day. I had to go to 2 stores, so I placed each receipt inside the envelope along with the change. Once I got home I put the extra money into my 'Savings envelope'. That money is no longer allowed to be touched.

For the larger envelopes like - groceries - I will keep a running tab on the outside of the envelope so that I can see how much I have spent at each store and how much money I have left.

An example of miscellaneous costs for me is the box of crayons that Sarah and Elizabeth needed for school. Or Josh asked me to make cupcakes for this class, so that cost came out of the misc. envelope. Or if we rent a family movie. etc...those costs are all covered under misc.

I try and challenge myself to see how much money I can save each two weeks. Some weeks, I have done really well, and saved more money than my target goal (I set a target savings amount every 2 weeks). Other weeks, I fall short of that goal. It just depends mainly on what groceries I buy because that is one of my biggest variable costs.

It was hard for me, at first, to use this system because I was embarrassed to admit that I did not spend my portion of our family money very well. I was not managing our day to day expenses in a responsible way. I now, can say without a doubt, that I very responsible with my money, and it has allowed us more freedom that I ever thought possible. I don't worry about where money is going to come from or if I will have enough. It takes me a couple of hours every 2 week period to keep track of expenses and plan out the next check, but it is time very well spent.Plus it is so nice to see that my 'Savings' envelope is getting fatter and fatter every week.

I have no doubt that if you try this, you too, will see the benefits of this. I bet you'd be surprised where your money really goes.