Monday, 19 October 2009
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Trying Out The Envelope Method
I've had friends in town the last couple weekends, and I've realized that I completely went over my budget during that time. It's surprising, but I'm having trouble keeping on track here because everything is so much cheaper than NYC. It's a little counterintuitive- you'd think I'd be saving money since things are less expensive.
Instead, I find myself buying things more frequently because the price at the register is less. But all that spending adds up!
So I've decided to try a new budget system I've read a lot about online- the Envelope System. The specifics vary, but essentially you take out the amount of cash that is your budget and stick it in an envelope. The money has to last for whatever time period you choose. So if you run out before the time is up, you've gone through your budget and you're done.
I'm intrigued by this method because even when I think I have a budget in mind, it's easy to go over when I keep swiping my debit card. So I think that starting this week, I'm going to take out a weekly budget in cash for my "fun purchases". I'm going to leave most of my cards at home, except for the one I don't ever use, just in case of an emergency. My particular weakness is food- the restaurants and coffee shops here are at least 1/3 cheaper. Hopefully just being able to spend the cash on hand will cut down on my visits.
Have you ever tried the Envelope Method? How did it work for you?
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- From: Cara
- Name: Cara
- About Me: I'm a 24 yr old back in the Midwest for law school. I've survived the first semester as a law student after working as a paralegal for two years. Let's see how the rest of the time goes!
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Comments (92)
Nice! I think I'll try it out the next time I travel. :)
Nice idea but simply being aware is good enough for me. Anyone trying this make sure to keep that envelope tucked deep inside that purse of yours. Don't want to lose it or tempt anybody to steal it.
Nope, but planning on trying it soon.
It works really well if you stick to it (i.e. don't pull out that credit card once the cash is gone). My parents taught us budgeting using the Envelope Method.
Good for you! I've often thought about trying the envelope method, but lately have been having success obsessively charting everything on excel spreadsheets. That's pretty tedious, though, so if I ever have kids or a more hectic life, I may have to give that up and try the envelopes just because it seems so much simpler!
Good luck! I'm already interested to read how it goes for you!
I use an envelope to save money in, i save $20/ week, i leave it in there because i usually forget about it and its not just cash laying around in my wallet
Dave Ramsey rocks and if more people would follow his advice, debt-per-person wouldn't be at $38,766 USD. Because of his advice, the only debt I have left is just over half of my mortgage, and I may be able to pay it off completely in August of next year. The envelope system works, along with the rest of his teachings. No, I don't get anything for endorsing him, it's just that good!
Epic fail. I tried that for about a week and went back to plastic. Yes, plastic. I don't know if seeing the list of charges is what does it or what, but it works.
sounds like a good idea
I live by the envelope method.
I utilize a variation of the envelope system, only I use different bank accounts, savings, fixed rate bills, variable bills, and spending money. gives the same advantages of the envelope system, but offers the added protections of using cards rather than cash. Of course it still requires responsible management of the accounts.
i use a version of this method. My husband gets paid cash, and my money (which is generally more than he makes, until recently) gets direct deposited into our checking account. The cash my husband has on hand (about $60 on any given weekday) is our spending money- ie, for cigarettes, toys for the kids, junk food, and (occaisonally) a night out- while the checking account stays stocked for more "important" purchases- clothes if we need them (we rarely have to buy them, however), rent, and food.
It's working for us so far, and we hope it continues to do so.
my dad does that, its irritating, but me and my husband use some form of it at home to keep money separate ie, rent, gas, etc.
hey i do this in my car! i put in all the tips i get and just use the money in there as like my fast-food drive-through supply. nobody break in my car please
Yes, and it works for me!
I will have to try this. You know...my grandmother used to pull out an envelope of money whenever we went grocery shopping. I think she was onto something.
I used to use it all the time although I had 3 envelopes. 1 for petrol, 1 for groceries & 1 for fun & incidentals. That way I knew if I spent too much money having fun I still had gas money to get me home. It worked a treat, I'll have to get back into it :)
It works a lot better for me.
I often leave my Debit Card and Credit Cards at home, I do keep my emergency card with me at all times, but I won't use that one. I have been doing this for years and it works well for me and if perfect while on vacation, which is where I have a hard time.
Wow, this sounds good because you can visually see your budget whereas with debit or credit, you don't actually see the dollar bills you spend.
I've used this for years in the past. Just take out the cash and put it in my clutch.
But ever since I realized the power of the 1% cash back on my CC, I've been doing that. I usually keep a pretty good track of how much I spent (from the years of using the "envelope" technique) so I usually never have any problem.
I have a different way of doing things. I put all the money I need for bills in the bank. And then I keep all the money I need for food in cash. And then all the other money gos an a savings account at my bank called a Chirstmas Account. And I can start it anyday of the year and it makes it to where I cant touch anything in it till 2weeks before chirstmas.
I love have the extra grand or 2. For my chirstmas shopping :]
good idea
I've done this for about 16 years now, but I have several envelopes marked for specific purposes (food, gas, Walmart, etc.) plus a Christmas envelope I toss cash in once in a while. That way I have some idea how where the money is going, not just how much I am going through in general.
I would do it, but unfortunately, I am UPSIDE DOWN. I started selling Avon (which is at least making my credit card pmts monthly...) I am a single mother and it's difficult. I've tried cutting out everything I can...but unfortunately the gas still ends up on the credit cards...Once I actually get to have enough money for gas (which is a necessity) then I can do this. But as someone said, knowing is good enough for me.