Sunday, August 29, 2010

Our Envelope Categories

To keep within budget, we use a cash-only system.  Basically, we draw up our budget each month, stuff money in several envelopes assigned with a category,  and we're on our way.  I should clarify that we do use our debit card for gas and online purchases only, mainly because I don't want to get my little ones out of the car just so I can use cash to pay for gas.  Obviously we can't use cash for online purchases, and that can get a little tricky.

If I find a fabulous deal online for say, clothes, I go ahead and use my debit and then take the cash out of my clothing envelope and deposit it in the bank.  Maybe more trips to the bank, but ATM's work well for me since I can go there any time.

Using the envelope system, alone, has saved us the most money in our budget.  I would say it's the number one thing you can do to save.  We know exactly where our money is going instead of wondering where it went.  Another very real fact is that people tend to spend less if they have to physically hand over those dollar bills. It's much easier to swipe a debit/credit card, but the act of not handing over your hard earned money tends to make it disappear faster.

Here's the categories we use:
  • car repairs
  • medical/dental
  • oil changes
  • housing (repairs/maintenance)
  • sitter
  • Rx
  • hair cuts
  • car license
  • office/school supplies
  • clothing
  • restaurant
  • gifts
  • blow (husband and I each have an envelope to use on whatever we want)
  • groceries/household
In no way do I carry all of these in my handbag.  I grab them as needed.  We have a lot of categories, some people use less, but after doing this for 9 months, we found these work for us.  I also have an envelope for an item we're saving for: a soy milk maker.  Not a need, but we feel our family would get a lot of use out of it (and in the long run, save money by making our own soy, nut, rice and oat milk).  So we save a little each month (actually my husband and I are putting a bit of blow money in that envelope).

If you use cash, do you find you spend less?  How do you budget?

image credit: photoxpress


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  3. THat's a lot of envelopes!! I am reading Dave's book, & Erik will read it next. We feel like we are doing pretty well (i.e. no debt except our house) but also feel like we could do better. I think the cash system would take a long time to get used to for me...I would be more likely to use my debit card. I feel like when I have cash I actually spend more, because I'm more likely to use it for small purchases that I feel dumb putting on a credit card.:) But maybe if it was in a specific envelope, I wouldn't...who knows! We'll see.:) It all just takes so much time! The couponing, shopping at different stores, etc. I do it when it's worth it -- free stuff through rebates at Rite Aid, $10 off $10 purchase at JCP (just got my kids new CARS t-shirts for $.99 each!)...but I can't always do it every week.

  4. I does take a lot of time, but I treat it like a part time job, which it is! I've actually been a little lax this summer, but I'm already gearing up to start the routine again (just got back from Rite Aid and scored 4 boxes of hair color and two bottles of dish soap for $5, and got a $5 Up reward back!).

    We do have a lot of envelopes, but we were having trouble always knowing where to draw from, so I got more specific, which works for us. I've read that most people use less categories. It's all about finding what works for your family.

    Try cash for at least six months, to give you a feel for it. And good score on the t-shirts!

  5. We really should go to cash....I get lazy still with the debit card. Sometimes I have no idea how much I've spent until I've looked at my receipt when I get home. I'm trying to cut down to $100 a week average for food (down from about $150). Still seems like a lot compared to what you're pulling off! Mostly it will mean planning ahead and not going to the store! So far so good.

    How did you decide how much to put in your clothing budget? I love clothes, I love to buy them on sale, I like to buy them at thrift stores, and I love buying nicer, higher quality clothes for primarily the kids and I. (DH seems to never need does that work??) It's always been a bit of a sore point, because he thinks there should be "$0" in the clothing budget - he's for a 'case by case' system - despite my pleas that this is highly un-realistic and unnecessarily guilt-inducing. Sigh. Thoughts? CB

  6. Clothing's different every month especially since we just started school. We get some help from grandparents (esp. the ones who love to shop:) for new school clothes. But it's roughly $100-$120 per month, with a couple of months being higher. This seems to work for us with me second-hand shopping and hitting sales, etc. Of course we hand down just about everything through the boys and trade in Emma's stuff at Plato's closet. It seems to be shoes that are a bit more tricky-growing kids + not being able to hand those down very well = a lot of shoes.

    You know I LOVE to shop, but I consider it my kids time to shine and that's what gets me through when I'm having a gross clothes day (although watching 8 straight episodes on Netflix of What Not To Wear-the mom version, has been an impressive learning experience). I'm so thankful to my mom who took me to Macy's and Kohl's two weeks ago to up my wardrobe. What a blessing! I was getting by with what I had, but that was such a help!

    One other thing, CB, you don't have ANY debt! So you don't need to be as extreme as we are. Just set a monthly cash budget for clothes. Can't overspend that! That's totally under control, right?!

  7. True, true, having no debt does make it a little easier to spend more in some months and less in some months. We had shoe issues this year too, as the eldest boy tends to completely thrash both his tennis shoes and his Romeos. We went with Vans this year, as I've heard from other moms that they hold up well because they're made for skater kids who typically drag their feet a lot. We'll see, and of course, he totally loves them despite being slightly more expensive.

    Such a great blessing that your mom took you shopping. It's a great time of year to hit the sales and the new fall items at good prices, especially from Macy's. Thanks for the thoughts :-) CB