Envelope system?

[kissjo]

Does anyone here use the envelope system for budgeting? If so, what is your experience with it? Do you like it? How often do you alter your monthly budget? Did it help you budget accurately?

We are thinking of starting it in the New year to help us track our spending a little closer. I am a little worried about taking all that money around with me, but I find that my debit card is a little too convenient for me at times and thats how I got a little out of control with my spending the last couple of months.

Thanks!

[JackieL]

this is a great new years resolution!! Also check out frugal mama . com. she has some great downloadable sheets that help you track your daily/monthly/yearly spending.

I personally don't like having so much money laying around in envelopes, I find tracking works better.

thanks for this question, I am interested to read everyone else's ideas!!

[Cia]

Yes, have done this for years. I no longer use envelopes, but know how much I have budgeted for the month/week for our needs.

After the bills are paid, cash is brought home to be used for the month. I prefer cash to debit cards or visas.

It takes a while to figure out how much to allot to each category, food, gas, clothing, prescriptions, pet food, etc. I found it easier if I thought of it week to week, take your total budget and break it down to how much $ you have per week. At least it worked for me.

When I have left over money ( and yes, some months you will, if you are super cheap like me, lol ) I put it away, for an emergency fund.

Plastic, is not "real" money to me, but holy smokes, get me to part with a 20 is a whole different story. This system does not work for everyone, people who can't keep money in their pockets, but for us, it works great. I like to have cash on hand, and a Visa for backup, for those unplanned emergencies.

You will find a system that works for you, it does take time, and it it easy to just give up, but push through it, it works and the more aware of what you spend, the more you can save and pay of your debt. Just my thoughts on the matter

[Travelnut]

Have you ever seen the TV show "Til Debit Do Us Part" with Gail Vaz-Oxlade.
She has a jar system & a spending binder to track every penny spent. Works very well.

We use are no fee debit cards from ATB and track every penny in our chequing account.

A good book to get is "The Wealthy Barber Returns" by Dave Chilton. Bouns it is a Canadian book.

A good way to save is "Pay your self first". Take 10% off the top of your pay cheque (before you do anything) and sock it away. If you can take 20% and sock that away. Learn to live on less.

I am not sure who said this:
"The average American Millionaire lives in a 25year old 1200SqFt home, drives a 10 year old car, makes $50,000.00 a year and clips coupons".
Love it!

[LG1385]

Hmm I'm wondering if we should try this envelope system. Not sure if hubby will go for it but I'm going to bring it up!

[Esquao]

Ditto exactly what Travel nut said!

Use the cash, instead of the debit/credit cards. Much easier to track. I use the envelope system, keep the receipts in the envelope as i spend. When the moneys gone, its gone.

I love watching til debt do us part!
We pay ourselves first, its auto debited from our chequing account into the savings.

[Orual]

We follow Dave Ramseys plan and I pretty much only use cash. I don't carry the whole months worth at a time though, only what I need for that trip. Part of making it work is only making planned trips. We do use the debit card for buying gas, just because it's so much easier to pay at the pump with a toddler in tow. I'm not too worried about carrying cash, or having it in the house, esp because I only carry enough for that day. Usually most of it is spent pretty quick.

We sit down together and discuss our budget everytime money comes in and plan until the next time we think money will come in, so much easier now that we have a regular income. We will also stop and rework the numbers if a spending item comes up that we didn't discuss. It's really time comsuming but so much more important if you don't have a regular income, really quick and easy if you have a regular income, but still worth the time.

We always try to come in under budget and if we can do that consistently for a several weeks we will lower our budget. If we find it's getting too tight we raise it a little.

A couple of things, we have a monthly clothing and gift budget, but don't use it everymonth. That money just rolls over until we need to use it. Same with car repairs.

Keeping on budget with groceries and stuff requires good planning. I don't really stockpile, we just don't have the space, but I get great deals because I plan. When I open a product I put it on my list, then I ususally have several weeks to several months to find a good sale (and now pair it with a coupon). I will keep a few of somthing around, but never more than six months worth. And I will pay ridiculous prices for things we almost never use, like paper towel, we use 1-2 rolls a year so I only buy two packs, way more expensive per sheet, but buying a 12 pack means I may have 12 years of paper towel. Doesn't seem worth the savings, esp when you end up moving 3 times in that period.

It does take a few weeks to get everything working, but it is so worth it. You know where every penny went and can easilly see what you have left to spend. It's really a great motivator to save when you get to end of the month and still have money left over.

[kissjo]

so, for the people who do this, when you go out, do you take your debit and credit cards out with you? Or do you leave them at home to resist the temptation of using them?

[jmae]

I first read about the envelope system in this great book targeted specifically to young women to help them save money & find ways to make more money. It's called "The Smart Cookies Guide to Making More Dough". I thought it was fitting to share with Smart Canucker's lol. I highly recommend it as it goes through everything possible money related, specificaly to a female as a lot of women find money matters intimidating. Literally, the only thing I found this book didn't go through was coupons ... but I have all of you to help me with that

I personally haven't had to use an envelope, but one of my RRSP's come directly from my paycheck, as the company matches. I then pay off all my bills & I pay some stuff like power and phone bills in advance as it works out better the way my one bi-weekly paycheck is much larger than the other. That way, I find it evens out. I put as much as I can onto my debt to pay it off quickly, and I only leave 100-200/week available to spend until my next paycheck. Mine sounds like a lot of extra cash but I have to expense quite a bit of stuff through work, so I always keep extra cash around just in case of that as I'd still rather avoid using my credit card even though I know I will get reimbursed. When I really cut down on my spending, I roll the extra cash over so I can get bigger purchases or don't feel guilty if I stray to go out for a nice dinner.

I also have built up in a savings account an amount that I can't easily access specifically for emergencies so I don't have to use my allotted spending money or credit card. Women typically are the ones that will take time off to take care of a family member. When I learnt that and had a health scare where I couldn't work for awhile, I started very slowly, putting away $50 here and there, and building up so if I was ever without work, I could now be okay for at least 3 months.

[KrazE]

I very rarely carry cash, but I have always kept a detailed budget in excel; the file I still use goes back to 2006 - every month is a new tab.

I know what I need to pay & when, so all bills are paid well before due dates. Even Hydro which is billed every 2 months gets a payment every month so I always see a credit on my bills since I usually overpay them by a bit every month; I like round numbers, so I round it up to the nearest dollar.

I always know what's in my account, and keep close track of what I am doing with the money.
Typically I will use my PC Mastercard when I am picking up groceries etc instead of debit because it earns points, then when I get home, I simply transfer the amount I just spent over to my card so it was much like I used debit, but earned points instead.

I still have my main account with CIBC as I have been with them for many years and have my Visa with them, but I also have a PC Financial account along with the MC.

[Orual]

so, for the people who do this, when you go out, do you take your debit and credit cards out with you? Or do you leave them at home to resist the temptation of using them?

We do not have credit cards, and find no need for them. My debit card stays in my wallet, but I only use it at the bank and for gas. I treat it kind of like it only works at those places. Like my sobeys card goes everywhere with me but I only use it at sobeys because it only works there. I find I never need the card though, We tell every dollar of our paycheck where it is going, so there is never a moment were I don't have enough cash and need to pull out the debit card.

I am also really careful about points programs, I am signed up for pretty much all of them, but I found I was spending more than I intended just to get bonus points. The PC one is pretty good because they don't offer promotions that tempt you to buy what you don't need, however they require you use their credit or debit card, some people can track, some people can't. Some people really need the visual of the cash (I am one of those).

Our major goal at the moment is to spend as little as possible, so we can be out of debt as soon as possible. Seeing a pile of cash at the end of the month is a really good motivator for that.

[JackieL]

Our major goal at the moment is to spend as little as possible, so we can be out of debt as soon as possible. Seeing a pile of cash at the end of the month is a really good motivator for that.

I love it!!

This is a fantastic thread!

[RedEng]

Great info everyone. I know I definitely spend more with a credit card, back in University I only used cash and I knew exactly how much I could buy, of course most of the stuff I did buy was full price.

DH and I save all our receipts and it gets enter into Quicken (software program). It keeps track of our savings, RRSP's and spending per category (Household, clothes, gas, etc.) Once a year we go through to see how much we spent and how close we were on budget. It's also a good tool to see how much we spend per month to budget for retirement.

I don't think I could give up using my credit cards with all the loyalty points I get, but if you want to be strict about your budget then cash is definitely the way to go.

[Cia]

so, for the people who do this, when you go out, do you take your debit and credit cards out with you? Or do you leave them at home to resist the temptation of using them?

My debit and credit cards are always with me in my wallet. I like to have them in the rare case that the cash I have with me is not enough, which has never happened, but I like to be prepared.

I feel the same as another poster about having to be careful with the "bonus" points that stores offer, Airmiles for one. I like to get Airmiles, but have to be careful, I will not spend 1.50 lb on a turkey at Safeway to get 50 Airmiles, when I can purchase the turkey else where for .98 cents a lb. I want the cash in my hand to go further for the month.

We went to an auction sale a couple of weeks ago, we ended up buying a bedroom suite for our spare room. I had my Christmas shopping money envie with me at the time, so used that money to pay for it. When I got home I did some money shuffling from the envies to cover the cost of the furniture. If I did not use this type of spending system, we would not have been able to buy the furniture, as I would not have had the cash to do so. Now our company does not have to sleep on a very lumpy hide a bed anymore. Yippie for cash.

[xnewfiex]

I Dont Know If You Have A Iphone Or Not, But There Is A App Called Budget with Back In Black.

Great App For Helping One Budget.