Monday, March 28, 2011

Envelope System

I am sharing one the coolest tools Don and I are using from FPU.(Dave Ramsey) It's called the envelope system, when you take the class you get a smaller version of this for free. Or you can make your own using envelopes. That's what we did before we took FPU. Basically, after you make your budget together for the pay period, you just divide up the cash into different categories like, groceries, blow money, gas, eating out, entertainment...etc. We use 4 envelopes.
  • Gas...but we actually use a debit card so we can pay at the pump, but I write down each gas purchase on the envelope.
  • Groceries
  • Pizza(1 X per week we eat pizza out)
  • Don's cash..our blow money 
                              What happens when the money runs out?? That's it, your done until payday. It's too easy to spend money you don't cards...even debit cards(that's why we only put a set $ on it for 1 category..if we mess this up, we're going back to cash on this one too!) It's crazy how hard it is to put down cash for something vrs plastic or paper(checks)...I mean I really think about it before I part with my cash, I rarely did that with the other options!! Anyway, this's hard to argue with each other when we decide on a budget together and it's easy to see what's left, and you don't have the issue of forgetting to write it doesn't matter! Because once it's gone, it's gone. Simple, huh?? I love it!


  1. It's funny that you post this as I was just thinking the past few days about how much better we (I, the dominate spender) did when using the envelope system. I don't like carrying all that cash around though is the only problem or even having it in the house. And I also had a harder time keeping record since I can download my transactions from our e-teller to our Quicken automatically and see everything and categorize it easily. So I've been thinking of trying to maybe carry around monopoly bills, still in categorized envelopes, and take away this when I use our debit card (we don't have a 'credit' card). What do you think?

  2. Although we haven't studied Dave Ramsey very extensively (just looked at his website a few times, plus what I've gleaned from Money Saving Mom's site) we have for the last four years kept track of every penny we've spent in a budget spreadsheet in Excel. Recently though, with Andy's job situation, we decided to go to the envelope system for our Grocery and Sundries line items. Although we never spent money we didn't have before, we did spend more than what we had allotted in those categories most months. We're finishing out our first month and I've gotta say, I LOVE it! And we made it!

    Erika, I don't keep track of how the money in the envelopes gets spent, I just enter the amount we take out for the envelope in our budget, and when the money is gone, it's gone. I do keep my receipts in the envelope so that if I'm wondering what I spent our money on I can look back through it, but overall, it's made keeping up with the spreadsheet in Excel a LOT faster because groceries and sundries are the bulk of our expenditures each month.

    Those look like some awesome envelopes, Debi!

  3. Erika, we don't carry that much around. I pay most everything online, so only certain things like I listed...grocieries, pizza, and Don's money is cash, and you can take the amount only that you want to spend leave the rest at home or wherever..even in your bank, if that makes you feel better. We only budget $80 a week for groceries..this includes all paper goods and cleaning supplies too. We aren't walking around with hundreds of dollars. For us and the studies show, for most people, seeing what you are spending reduces overall spending. You can do whatever works for you, Erika, that's a cute idea to use monopoly money. Keeping a budget online is a great way to track things out, I actually am designing our own personal budget on a spreadsheet document to print out each pay period, I am using FPU's budget as my prototype because it's very detailed. I actually enjoy filling in our budget with my own hand using a's just is more gratifying to me that way. Obviously, budgeting is the most important aspect of being financially you both are WAY ahead of most people if you are already doing that...and Michelle, not overspending and living within your means is you have found a system that works...YAY!

  4. I saw some cute envelope things on Etsy that you can have customized and put they fit into your checkbook or purse. Not sure that Dave would want you to spend money on cute envelopes (might be defeating part of the purpose :)), but they WERE cute! A lady from St. Cat's ordered them and showed hers to me :) Good for you on getting rid of the credit card! Vance and I fell in to that trap once too... now that we have dug ourselves out of what was once a mountain of credit card debt, we stay far away from credit cards :)

  5. Danielle, thanks for the mention, I looked at Etsy and they have a really nice set that fits into the Dave Ramsey has 10 envelopes with it, so it's even better than the replacement envelopes. Since they range from 10-$20, I don't think that is unreasonable at all. Hey, if it keeps people on track and organized, it's a small investment in a HUGE lifestyle change. Good for you, cards really are the downfall of our nation. Don and I have vowed never to use them again, or even have one. The bible even talks about credit over and over again....I can't argue with God, He's right every time.

  6. oops forgot to subscribe to this. Thanks for your tips. Ok so how do you limit yourself when doing online buying if you can't use cash? You just stick to your budget I suppose?
    I do use this sytem but can't say I am a 'purist' TMM follower as we still have debt for our house and our cars but we do have a spending plan that we try and follow and I have a penny-pincher for a dad so I can't help but watch my every dollar, especially since it's not even my own $!

  7. Erika, yes, I would just transfer my $$ to my debit card...but I haven't been shopping online in awhile..I think I need to look into getting a debit card for my checking account, the one we have now is a seperate account, I could start using that as my primary, but I like having our primary bank account local. As far as being a purest...we aren't either, we don't follow every single Dave Ramsey principle...but life is about learning and trying to conform our lives to be Christ-centered, not self-centered...which is my battle.

  8. "but life is about learning and trying to conform our lives to be Christ-centered, not self-centered"

    Debi, I like Emprise it has a high-yield checking account and the customer service is AWESOME! Michelle D recommended it to me and we are very happy with them.

  9. Thanks Erika, I'll check into that.