Our Family

Our Family

Thursday, February 7, 2013

Budgeting With the Envelope System

Running a household is like running a business.  Money comes in and money goes out.  If you are spending more than you are making, that's a problem.  Not knowing how much you are spending is also a problem.  Making and staying on a budget is an easy way to manage your money and see exactly where it all goes.

A few years ago, I heard of the envelope system.  You made a series of envelopes each with a spending category on them: groceries, clothing, gas, vacation, homeschool supplies, etc.... You decide on what amount you spend in each category and put that amount of money in each envelope.  All of your income should be accounted for.  If you make $2000 per month, your categories should add up to $2000.  When the envelope for a certain category was empty, you could no longer spend money in that category.  If there was money left over, you carried it over to the next month.

When we used the envelope system and dealt all in cash, I found it very easy to stay on a budget.  But, pretty soon everything became electronic.  Direct deposit and online bill pay were much easier ways to pay bills.  We rarely carry cash and use our debit card all the time.  I have a hard time keeping track of how much I spend when all I have to do is swipe my card and hopefully not run out of money before the end of the month.

I really wanted to get the budget back on track.  I am responsible for managing the money and paying all the bills.  Realistically it would be very hard for us to go back to a cash only system.  The bank that we use (and that holds our mortgage) is far away and we have no access to an ATM.  I pay all of our bills online.  I was trying to figure out a way to track our expenses when I found it.  An app for the iPad called Budget Envelopes $2.99.  This is exactly what I was looking for!  An electronic version of the system that had worked so well. It didn't take long at all to set up all of my envelopes.  After I get home from shopping, pay bills, or make an online purchase, I enter in what I spent.  It is so easy and takes a couple of minutes.  I can also look easily and quickly before buying something to see if I have any money left in that category.  I have only been using it for a couple of weeks, but so far I am very happy with it.
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