Envelope Budgeting

My husband and I are in the 5th week of Financial Peace University, a Dave Ramsey program. The first week in the class we were given the Dave Ramsey envelope system. After doing our quickie budget per the program, I put the envelopes into play. I have been using cash only on my purchases, as I lost my ATM card over a year ago and decided not to get it replaced.

I have to say, I am amazed at how well this system actually works! It really does make me re-think my purchases. While I have been using only cash for a year now, I didn’t really designate any money in any category. I did have real envelopes for a month or so, and then I just jumbled it all up in my wallet.

After starting the class and getting the “real” envelope system, I carefully went through my written budget, then went through my written budget, then went through it again. I carefully considered what I really spend money on, to see what envelopes I really need. I considered the basic necessities that I buy, as well as my impulse buys. I am really bad at impulse buys. I always save money, but if it’s an impulse buy, chances are I don’t NEED it, no matter how much money I’ve saved.

Here’s the envelopes I’ve decided to use:

1. Food/Household* This includes food, paper products, cleaning products and baby products.
2. Gas
3. Entertainment
4. Birthdays (This is to be used for my kids’ presents and birthday party items, as well as family and friends birthday presents throughout the year).
5. Tithe (I use the envelope provided at church, and turn it in at the end of the month).
6. Spending cash**
7. Clothing

*I do online surveys at Opinion Outpost that I redeem for Amazon gift cards in order to purchase diapers. This keeps my baby product cost to a minimum.
**My personal spending cash is very low, but this is to cover things like a coffee (I usually get free ones, but just in case I need one…), a granola bar when I forget to eat, or I save it for the next week, and combine my two weeks and take my kids out somewhere fun to eat.

I have done really great this week, and tomorrow is Friday already! Time to load my envelopes with more money! I have not used my Entertainment, Birthdays (no presents to buy this month), or my Spending Cash envelopes. And I have a few dollars left over in my Food/Household envelope.