Years ago my husband and I felt like we were living paycheck to paycheck. No matter how much money we made each week it always seemed to be gone before the next pay day. We always had enough to cover the main bills, but something like my husband needing a new pair of running shoes would leave us short.
It became so frustrating. We both felt like we didn't spend that much on other things, but we couldn't figure out where the money was going. Finally one night while we were talking about it I got an idea. My parents had used an envelope system while I was growing up. I remembered that they had multiple envelopes for items like clothing, eating out and groceries. At first, my husband was a bit resistant. Since it was the same amount of money we had each week, he didn't think it would work. But, he agreed to give it a try.
It only took a couple of weeks to realize that the envelope system was a huge success. We could easily control spending with an envelope system. Every two weeks we would go to the bank and take out the amount of money for those weeks. There were plenty of weeks that we didn't spend the money in some of the envelopes. But then when something like spring came and we all needed new clothes we would have the money in the envelopes. No more living paycheck to paycheck.
One of the best things about this system is we each have our own spending money. If I want to go grab McDonalds while I am out, I can. If my husband wants to go Starbucks, he can. We don't ever have to argue about money or what the other person is spending.
By having the envelope system we started thinking more about what we were spending. Suddenly those $5 smoothies at the mall seemed way overpriced. When we have to use cash and not a bank card we think a lot more about what we are buying.
Want to start your own envelope system? It's so easy! First you will need to figure out what your categories will be and how much you think you want to spend. When you are first starting out I recommend using just plain envelopes. The dollar tree usually has these for $1. This way you can play with the numbers for a few weeks and move things around if you need to. Once we knew for sure what our categories and amounts would be we switched over to a small accordion file. You can pick them up for a couple of dollars. Everybody will have different categories, but these are the categories that we use.
I buy all of our groceries with cash. This helps me from over spending at the store. If I don't have the money on me, I can't buy it. If we are going on a trip that week I save some for when we get back and some to pay for meals while we are on our trip.
My husband, my son and I all have our own spending. If we choose to buy something that is for ourselves or grab some food while we are out we use our personal spending. My son's is much smaller and is considered his allowance. He helps out around the house, mows the lawn and has to keep up good grades to earn his money.
I love eating out with my family. As a kid we always went out to eat on Friday and now it just doesn't feel like the weekend if we don't eat out. It was something we often skipped before the envelope system. Now we can eat out every weekend if we choose. Some weekends we will spend much less and save it up for a nice birthday dinner.
We often spent our money before we could use it to buy new clothes. Now we go weeks or sometimes a month or two without buying clothes. Then the money builds up and we have it for times we need it, like back to school shopping.
If we are gone one weekend or don't go to church we just keep it in the offering envelope for the next time we go.
May is birthday month in our family. We have a lot of birthdays in that month. It's not a problem buying gifts that month because we have saved our money. Same goes for Christmas. We figure out what we have to spend and then we buy presents accordingly.
Having an envelope system won't solve all your money problems, but it can help you try to figure out where you are overspending. Do you use an envelope system or how do keep track of your spending?