Samiam Posted January 10, 2011 Share Posted January 10, 2011 Does anyone use the envelope system as part of their budget? We are trying to set this up. We have our budget all set up on the computer, but perhaps I am over thinking the envelopes, because I can't quite grasp how we would do this. I get the easy ones, say the "Blow Money" or the "Entertainment", "Household Cleaning/Toiletry" even long term savings, say "Sports Money" (a category we created since we have 3 boys in sports and fees/equipement several times a year). That goes in and stays there until we use it. But it is the monthly reoccuring bills that are causing me confusion. We pay 99% of our bills online. Actually, I can't think of a bill that we don't pay online, except rent, which is via check. Now, ideally, until we can train ourselves financially and really turn around our money drain, I would like to have every bill to have an envelope. The goal would be to put a portion each paycheck into that envelope so when that bill is due, the money has compiled, instead of all of the money coming from one paycheck, plus it doesn't get spent by debit card swiping since it is not in the bank to be used (we REALLY need to do it this way until we can train ourselves to stop swiping the debit card). This would be especially useful for larger bills that eat up paychecks, ie rent and car payment. But then we have this envelope full of cash, but it needs to be in the bank so we can pay the bill. What a pain to have to make sure that cash gets put back in the bank at the right time each month. Especially so since our bank is out of town (about an hour), where DH works so only he has access to the actual bank and he works nights, so bank isn't even actually open when he goes there. I guess we could make a plan that once week DH goes to the bank and deposits whatever cash is needed for bills that week. Seems like such a pain though and if one thing goes wrong, then our bill is paid late. Am I waaay overthinking this? Maybe we shouldn't have every single bill in an envelope? I mean besides electric, which I am anticipating to be $300-400 this month, most of our reoccuring bills are less than $50 each. Tell me what you do? Maybe I am missing the obvious here??? Quote Link to comment Share on other sites More sharing options...
mom31257 Posted January 10, 2011 Share Posted January 10, 2011 I don't use it, but I think the envelopes are only for things you could use cash for such as gas, groceries, eating out, entertainment, clothes, etc. The idea is budget out what you want alloted each month or week, but when the cash is gone you can't spend more. People don't usually waste money on their power bill, but will buy things at the store too much. Does that make sense? Quote Link to comment Share on other sites More sharing options...
Peela Posted January 10, 2011 Share Posted January 10, 2011 A system like YNAB allows you to put aside a certain amount each month "virtually"- as in, you can manage your whole budget online and put aside money in different catagories each week or month- using the income that you plug in there. I use the envelope system for what I use cash for: shopping money, gas/petrol, kids classes, my personal spending, gifts, and miscellaneous. I have a wallet called savvy-cents with different laelled sections in it so that when I do the grocery shopping I am only using the money in the grocery section, not the gas section. It works really well fo rme. But before I got the wallet I just used literal envelopes and carried them around in my handbag. For the bills we pay onine, I spent some time organising them, working out exactly how much we needed to save monthly to pay them etc. Then I let that go because we stopped using the credit card for personal stuff and jsut used it for bills, and then paid it off (OK, not 100% but dh isnt totally on board and its better than it was.). The only reason I dont use YNAB - which I bought and love- is because we have a cash income and it didnt work well for that, for me, because not everything goes through the bank. Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted January 10, 2011 Share Posted January 10, 2011 I just attended a class this evening at church on this very subject. One guy showed how he uses an excel spreadsheet instead of actual envelopes, since he's paid by direct deposit and some of his bills are paid online. Basically, he created "envelopes" for each of his expenses and uses the spreadsheet to keep track of the money. He had categories for: Tithing Mortgage Insurance Car insurance Car payment Car maintenance Taxes (he's an independent contractor) Groceries College Clothing Entertainment Christmas fund Electric Cable Cell phone Gasoline Medical expenses There were others that I can't think of right now. Quote Link to comment Share on other sites More sharing options...
Heather in OK Posted January 10, 2011 Share Posted January 10, 2011 I use notebook paper (I used to copy the pages from Larry Burkett's book) and keep it in a 3-ring binder. My categories are: Tithe/Giving Bills Misc. Groceries Auto (Gas, payment, insurance) Dh's work expenses Surplus I simply take all of dh's pay (he has a full-time + two freelance jobs) and work them out for each category. Each has a number and I put a circle around it (just my little thing..lol). When I balance the checkbook I list each transaction on the appropriate page. After I do that, I put the number w/ a circle around it on the same line in the checkbook. That way I don't miss a transaction and I can see where each went. At the top of each category page I write: Date, Transaction, Deposit, Withdrawl, Balance. When you add up the money in each category, it matches what the checkbook and bank say we have. Our bills are around the same amount each month. Our utilities are on the average monthly payment plan so it doesn't fluctuate, making it easy to budget for. HTH! Quote Link to comment Share on other sites More sharing options...
Sparkle Posted January 10, 2011 Share Posted January 10, 2011 My dh is paid by direct deposit. Some of our bills are automatic withdrawals and the rest I pay by check. I budget the other categories and withdraw enough cash to cover them: Food (divided by week) Gas Miscellaneous (toiletries/paper supplies/hair cuts, etc.) Clothing Charity Pets Medical Entertainment Gifts I write the bills and budget down on paper each month, and there's usually not a whole lot of variation. I also keep all our receipts for cash expenses and record them in the computer on a spreadsheet, just so we can track where our spending goes. Quote Link to comment Share on other sites More sharing options...
Mommyof4ks Posted January 10, 2011 Share Posted January 10, 2011 The important thing is to give every penny a name, and once you do that it is easy to say ok, XXX amount stays in the account to pay for the electric, water, mortgage, and so on. The debit cards do not need to be used, because once the money in the envelopes is gone then it is gone until the next pay check. We do use the debit card for gas, because I don't want to lug my kids into the store to pay cash for gas but I know how much we spend on gas so I leave it in the account. The gas envelope just holds the receipts, not the money. All receipts go in the envelopes where the money came out. We have many envelopes, but that is because I am a bit anal. :D I have a notebook that lists all of our bills and which ones will be paid with which pay check. Start simple, get organized, and after a few months it will become easier! Quote Link to comment Share on other sites More sharing options...
Xuzi Posted January 10, 2011 Share Posted January 10, 2011 The important thing is to give every penny a name, and once you do that it is easy to say ok, XXX amount stays in the account to pay for the electric, water, mortgage, and so on. The debit cards do not need to be used, because once the money in the envelopes is gone then it is gone until the next pay check. We do use the debit card for gas, because I don't want to lug my kids into the store to pay cash for gas but I know how much we spend on gas so I leave it in the account. The gas envelope just holds the receipts, not the money. All receipts go in the envelopes where the money came out. We have many envelopes, but that is because I am a bit anal. :D I have a notebook that lists all of our bills and which ones will be paid with which pay check. Start simple, get organized, and after a few months it will become easier! Ooooh, having an envelope to keep the reciepts sounds SO much nicer than having one for the actual cash! The bank DH and I use doesn't have actual physical branches, so getting huge amounts of cash out for our cash-only bills would always require a huge fee (or emptying out some poor cashier's till at the grocery store :tongue_smilie:), plus I do a lot of shopping online (like for children's clothes) so this will make handling those cash-sometimes-and-debit-sometimes categories so much easier. I like this idea! Quote Link to comment Share on other sites More sharing options...
ELaurie Posted January 10, 2011 Share Posted January 10, 2011 you can download a free Easy Envelope Budgeting Ap It's convenient and very easy to use. I enter things on the EEBA on my phone when I buy them, because if I have to go back and do it later it becomes a chore, and I also tend to forget. Quote Link to comment Share on other sites More sharing options...
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