I know there are a lot of people that use Dave Ramsey’s Envelope Budgeting system. While I think it is an amazing budgeting system that works for so many people, I just can’t do it myself. I decided I was going to put my own spin on the envelope budgeting system to make it work for myself. I’m happy to say it’s been working out quite well!
Here’s how Dave Ramsey’s envelope budgeting system works: You have a bunch of envelopes for each category you spend money on each month, such as food, clothing, eating out, entertainment, fun money, gas, etc. When you get paid, you fill up each envelope and throughout the month you subtract your cash from the appropriate envelope as you need. When the money is gone, it’s gone, and you can visually track how much money you have to spend. My problem is that it’s such a hassle to have so many separate envelopes to track and make sure you don’t lose money! I am just worried that when we go out to eat, I’d forget to take the envelope, or I’d lose the money or something. I’d hate to have to carry around all those envelopes with me, so I devised my own envelope system.
How my envelope system works is like this: in addition to our normal budget, when Mr. Money gets paid (every two weeks), I take out $120. I know this doesn’t sound like a lot of money, but trust me, it works! I don’t pay for groceries out of this money. Grocery money is used with my debit card. I pay for gas with my gas rewards credit card and when I buy gas, I make a transfer over to the credit card from our checking account. The $120 cash is used for extra trips to the grocery stores to pick up small items I forgot (helps me limit these!), clothing, haircuts, eating out, and whatever else I want. I know the $120 is going to have to last me two weeks, so I am very careful about how much I spend, and it gives myself and Mr. Money a visual on how much we have left to eat out on. If we don’t have the money, we don’t go out to eat!
This system has been working very well for us. We don’t have to worry about keeping the separate envelopes in the house and carrying them with us. I would highly recommend you give it a try. I find that I spend less and am more careful when I’ve got the cash there in front of me. When I have my debit card and I make the frequent trips to the store, I end up getting a bunch of stuff that I wasn’t intending on getting.
How do you budget- do you do the envelope system, or are you a debit card user? Do you do something else?