Over the last few months, I have had many folks ask me about budgeting out their money to help them find potential ways they can free up money for other areas of their finances.
The envelope system above is fairly new- a reader who is very talented sent it to me in lieu of the white envelopes I have been using.
I started using Dave Ramsey’s envelope system in 2010 year when my husband was first gone to Georgia & Alabama for Army training; and continued through 2011 when he was deployed to Iraq; at the time, it was fairly easy because he wasn’t here to spend money…and he had limited access to money. He came back late last year and we had managed to sock away the equivalent of 6 months of his paycheck, just from streamlining his pay, and that money is now our Emergency Fund (along with the money we had in there to start with).
(One thing to mention is that may seem like a lot to put away, but remember.. he wasn’t here, and I lived a very boring 9 months with the kids.. we did not spent money on anything; before that, Dave was eating Jack in the Box, Taco Bell, renting movies ==> It adds up FAST)
Before the envelope system, I could never have fathomed being able to put away that amount….but we did, and I was proud that we did so.
“A budget is telling your money where to go instead of wondering where it went.”
–Dave Ramsey
Now that he is back, it’s a bit more of a challenge, but each day when I see deals that come around, I propose the question “Need, or Want?” I try to stick with things that I need, and that helps immensely… Most of the items others buy I stay away from.
This is how we started out –
::: We gathered Dave’s paychecks and determined how much (after tax) was coming in to our household – everything goes on paper.
::: We wrote down all of our expenses – Electric, Rent, Car Insurance, Life Insurance – everything that was pay on a regular monthly basis – even daycare (for Wendy)
::: The number that was left, we divided into categories: Entertainment, Gas, Clothing, Grocery, etc. We have 6 categories that we divvy money into.
::: I allocated a certain amount per category – for example…… for our grocery budget we set aside $40/week. ($25 when he was gone)
::: (I hate saying this because it sounds restrictive) but Dave gets an envelope with an allotment of “just Dave” money – it’s the only way I can prevent him from swiping that plastic debit card.
::: We spend that money until it’s gone – at that time, if we run out, that’s it – NO MORE SPENDING, and no trips to the ATM until the budget resets for the next month.
Any money leftover for us, goes into our kiddos college funds – 3 kids, 3 different 529 plans.
I would recommend checking out Dave Ramsey’s site online – he offers an extensive amount of advice, motivation, etc for making the envelope system a reality.
And if you are looking for a way to budget aside from the Envelope System, you can also try Manila - it is a free offer out there to help you manage your household accounts – including financial, utilities, subscriptions and travel rewards programs, in one secure place online.
I’m eager to hear your experiences with the Envelope System – do you have one?
How does it work? Or, what do you use to establish a household budget?
I took the Dave Ramsey course and it works. Who made the above envelopes they are beautiful does she sell them.
She did – and they are amazing. I’ll see if I can get her to comment on here. She’s fairly quiet.
I like your envelope system :) and would like to try it. Also, I checked out Dave Ramsey’s classes and I have a questions. Is the cost they note for all 13 classes? I’m assuming that this will be well worth the money ;)
Yes, the price is for all 13 classes, and it is worth every penny. :)
I’m 23 years-old and getting married this September. I have been using the envelope system for about 6 months now and am LOVING IT. I have watched my savings triple from what it was. With a wedding coming up, my fiance and I are thrilled at how well this is already working for us. I would highly recommend this system. Makes it a lot easier to track spending as well as prevent unnecessary spending ;)
How do you only spend $40 a week on groccerys???? I spend a lot of time scouring for coupons and home make a lot of stuff (granola bars, bread, granola, fruit leathers….) but just milk and cereal alone costs $20 a week. Add in diapers, fresh produce, sugar, flour…
I don’t buy diapers. I buy milk on sale and freeze it. I don’t buy soda… We eat alot of traditional Mexican rice, beans, soup, etc. I spend only $8 each week on produce, I price match Pros Ranch. Lastly, i am fairly picky on what I buy, we don’t use paper towels, paper plates, napkins, nor do we buy detergent. I have a large deep freezer of meat from Zaycon as well.
Sent from my iPad
I tried freezing soy milk once. Didn’t taste so good! Are you including your Zaycon in the $40 a week? I buy most of my produce from a co-op and my bulk items (flour, wheat gluten, TVP, Nutritional Yeast) from another co-op. I am very picky about what we eat, so that probably raises the price a lot (Vegan, No HFCS, No hydrogenated oils, organic as much as possibe…)
Zaycon for me was free… I don’t eat what most others buy. We aren’t completely organic though. My produce comes from Pros or is matched in price, Price at Pros beats every co-op out there. I dont think Bountiful Baskets s near as cheap as Pros.
We drink 4 Gal/ week in milk, little cereal, lots of oatmeal. I’ll stockpile huge when it’s free or very cheap, and right now I still have my cabinets full of close to free cereal from Safeway, I took the rebate money and put back into my grocery fund.
Sent from my iPad
I need to look into this an put hubby on a budget. Can you believe he spent over $70 on music down loads yesterday? Good thing I save a lot by using coupons!
Oh I can. I have that problem STILL.
Tonight in fact, he went out & got Wendy a $40 watch at Kohl’s. I’m not too happy.
I am a huge fan of the envelope system! I took D.R. course a few years back and have tried to find envelopes that would hold up over time. The ones pictured look very nice. Could you please tell me what they are made of? Also a brief description?
Thanks
It’s almost like a burlap type fabric………i’ll have to ask her what she used. I was using regular mailing envelopes but gah! Not a good idea!
She just made this herself. I told her she should have a store.. sell them to freapers.
You have inspired me to get us back on track. We did FPU because our choices forced us into it. It was the BEST thing we did. However, 3 years later we are creeping back into our old habits. We are looking at buying a house now and definately need to get ahold of our spending. So looking forward to getting our envelope system ready this weekend! Thanks again for such a good reminder!
We’ve been following Dave Ramsey since April 2008 and have never looked back. Of course, it has helped us take charge of our finances, but it has totally strengthened our marriage as well. We recommend Dave Ramsey, all of his books, and FPU to everyone. :)
Sheryl please have the person that made the envelopes send me her email. I want to buy the envelope system she made shown above. Please
What book can I find the envelope system in? I haven’t been able to find out which one it’s in.
Thanks!