My husband and I love to spend money, but with three children, a mortgage and a bunch of other bills, we often find ourselves spending too much money. So, when the credit cards started racking up, we knew we had to take control of our finances and that’s when I started to do some research and came across the envelope budgeting system.
This system basically works by taking all of your money out of the bank and placing it into separate envelopes for each expense and using it instead of a credit card – so you can see exactly how much money you have and where it goes.
When I first came across this method, I loved how simple it sounded and I loved how effortless it would be. Although I had to persuade my husband to do a little bit more work whenever he got paid by going to the bank, he has even come to love this system.
Not only has the envelope budget method completely decreased my family’s spending, but it actually has allowed us to buy more for ourselves. Before we would just swipe our card until we got a warning LOW FUNDS from our bank and if one of us hadn’t spent our money, we would basically lose it. Now, each of us gets our own allowance and we no longer wait for those depressing low funds warnings.
Using the envelope budget method my family has been able to increase our savings because we spend a lot less and we have even cut out wasteless spending because it never feels good to hand our last $10 to a Starbucks barista.
If you are looking for a way to gain back financial control this year, I highly suggest you try the envelope budget system too! Not sure how it works? No biggie, just follow these simple steps to make your own envelope budget:
What You Will Need
- Envelopes (At least 10)
- Pen to label each envelope
How to Start
I personally start my budgeting when my husband’s paycheck gets deposited and then make a trip to the bank to take it ALL out. Feel free to transfer some money to your savings or keep your bill pay money in the bank if it makes it easier.
Next, figure up your budget. For me, I keep most of my bill pay money in the bank, so its easier to pay bills with and I budget the leftover amount. The envelopes I usually use are:
- My Allowance
- My Husband’s Allowance
- My Children’s Allowance
- Gas Money
- Husband’s Gas Money for Work
- Special Money for Entertainment, Birthdays, etc..
Next, and most importantly, hide the credit cards and make sure NO one uses the debit card, all purchases are to be strictly made using the cash-only system.
When the week is over, or you get paid again, empty all of your extra cash (gas, groceries,etc.) that you didn’t use and put it all into your savings and you will quickly see your savings account add up!
This method has been helping my family save money for years and I hope it can help your family too!
If the idea of carrying envelopes around scares you, check out this Deluxe Executive Envelope System by Dave Ramsey (affiliate link) it’s one of the top-rated envelope budget books on Amazon right now.