Tips on Envelope Budgeting From My Experience
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| Envelope Budgeting Tips from Experience Image Source: Wikipedia/Michiel1972 cc-by-sa |
What is Envelope Budgeting? For an introduction on envelope budgeting to save money and stay within your budget, see my earlier post that covers the basics of envelope budgeting.
Today, I will talk about some things I have learned that make envelope budgeting work better in practice.
Get a Good Envelope
Envelope budgeting really involves only two things: an envelope and cash. It helps to use a good envelope. I have found that the money envelope gets some wear and tear as I carry it around and my wife also carries it around. My bank has nice envelopes that they offer me when I take cash out. I always get one of these. These envelopes have a resealable flap and are made out of a tough paper that may have a bit of plastic content. I think a regular mailing envelope would wear out quickly. The resealable flap is useful to hold change in the envelope as well as bills.Get the Right Bills When You Load Your Envelope with Cash
If you get too many small bills, they won't fit easily into an envelope. Big bills are not accepted everywhere and I worry more about losing a big bill. I have found that a mix of 10's and 50's works well. The 10's are nice for smaller purchases, and the 50's work well for paying for a bigger trip to the grocery store.Account for Spending Outside the Envelope Quickly
We have had a few times where we used a credit card instead of the money envelope when we did not have the envelope with us. Actually this happened a few times. I kept track of the amounts by writing it down on the envelope when I got home, and within a few days I removed this amount from the money envelope so I can deposit it into checking and use it to pay the credit card. This works fine since the food budget is not effected. We did use a credit card instead of money from the envelope, but then I took the money out of the envelope to account for this. The trick is to keep track of any spending that should have been taken from the envelope and make up for spending outside the envelope quickly before you lose track and no longer know if you are staying within your budget or not.One of the biggest problems with the envelope system is that it would be easy to stop doing it. This is the same thing that happens when going on a diet. You have good intentions and may do well for a few days, but then go back to your old eating habits. If you have an easy way to make up for spending that should have some from the money envelope, then you can get back on track.
Pull Out Money From the Envelope Before You Go Into A Store
At first I was carrying the money envelope into stores with me. It was sort of awkward sorting through the bills in the envelope at the checkout. I realized that I can just put a few bills in my wallet while I am in the car. Today I went into a store thinking the damage would be around $45, so I loaded $50 in my wallet from the money envelope before going in the store. Paying was quick, since I knew exactly how much was in my wallet, and it was less awkward than carrying an envelope stuffed with cash around. The total turned out to be just under $42, so everything worked out fine. Worst case, if you don't take enough into the store, you can run back out to the car to get more from the envelope.
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