Well one of our changes for 2012 (which I should have mentioned here) is that we are moving to a mostly cash budget! This is the approach that many money-wise people I know use in order to stay within their budget! With cash, once the cash envelope is empty, it’s empty. You can’t go over budget. And not only that, but when you spend money, you “feel” it more. What I mean by that is you are physically handing over cash and seeing your money dwindle, rather than just swiping a card. Hopefully this will make us more intentional with our purchases.
Many people switch to this method to ensure they don’t go over on spending in an area. For me, I am a numbers person and pretty disciplined, so we usually (though I’d be lying if I said never) did not go over budget when using a spreadsheet. But I did get exhausted and behind when trying to keep track of each little purchase via spreadsheet!! After talking to a few friends, we decided the money envelopes method was the way to go!
And just to get excited, I spruced up our envelopes to make them pretty. I used our extra Christmas card envelopes and markers! It’s like high school all over again.
Our categories for our envelopes are:
- His and Hers
- Going Out
- Hair cuts
- Groceries, Toiletries, and Home Goods (Anything I’d get at the grocery store or Target.)
- Home Maintenance.
Obviously we don’t do every category of our budget cash. Utilities, for example, wouldn’t make sense because we pay that online. And some categories we don’t use monthly, such as auto maintenance, though we are still debating if this should be cash.
As for keeping track of the envelope money, I have a list of how much goes into each envelope. I totaled the amount and figured out how many of each bill I need. This makes it easy for going to the bank. I can tell them – 10 five dollar bills, 8 ten dollar bills, etc. Also I wrote the amount that should go in each envelope on the inside flap. Of course, I can always scratch this out and write a new number, as our budgeting needs change, but it’s a helpful reminder.
Some of you may need to first take a step back and create a budget. I encourage you to do so, no matter how much you make! Learn more about budgeting here.
What does your budgeting system look like? If you use cash envelopes, do you have categories I don’t?