Using an Envelope System for Budgeting
March 25, 2009 by Karen Weideman
Filed under budget, finances, financial matters
As I’ve mentioned before, my husband and I have attended Dave Ramsey’s Financial Peace University classes at our church. These classes were very beneficial to our finances, as well as our marriage. Finally, we were on the same page financially and were both working toward paying off debt and saving.
One of Dave Ramsey’s tips for budgeting is to use an envelope system. You simply make an envelope for every area spending which can include: groceries, gas, childcare, entertainment/eating out, clothing, and more. The envelope system is a great way to keep you from spending more than you had allotted. It may take a few pay periods to find the right amount for each category.
No Credit Needed has posted a great envelope tutorial on youtube. Check it out.
Are any of you using the envelope system?
I do that! Just like shown on the video, using option one – all the money left over goes into savings. All the change is skimmed off to savings. It works great for me!
I kind of do that. I pull out a certain amount of cash for groceries and what I call “misc. expenses” each week. The misc expenses include going out to eat, entertainment, etc. We do not spend over the amount taken out and anything left over is put into savings.
My household uses an electronic version of the envelopes system, because we found it unwieldy to use real, paper envelopes for large sums like the mortgage. I am not affiliated with the company in any way, except as a very satisfied customer, but here is the website: http://www.mvelopes.com. It is not free, but it has proven well worth the investment. The first year we used it, we recouped $8,000 in savings. No joke!