Comments on: Cash Envelope Budgeting: Why Your Bank Hates It

By: Christine

Christine — Wed, 30 Jun 2010 22:41:53 +0000

I’ve been trying to do the envelope system. I have a nice excel spreadsheet and the envelopes, but I’m getting frustrated. Maybe someone can help me. A few envelopes I have, Home Repair, Car Repair, Household, Personal, Household, Gas, Food, Savings, just to name a few. The problem I’m having is I pay my main bills for that pay period (paid bi-wkly) What’s left over, I distribute between envelopes. But I never have enough to fill all the envelopes. Plus I think, it’s going to take me for life if all I put is $10 or $20 into Home Repair and Car Repair. What if I need a new tire tomorrow, I won’t have it. I was thinking of one of two solutions. I actually always pay my gas and food envelope first. So it’s what’s left over from that point goes into the others. 1) Putting money into which ever envelopes come next. Then the next pay period, the money for envelopes will go into the ones I coudn’t fill the prior week. or 2) After food and gas envelope, what ever is left, put it all into home repair. The next payday, the lump sum will go into the next envelope. Does that make sense? Thanks Christine

By: Jessica

Jessica — Wed, 30 Jun 2010 20:50:27 +0000

Anyone who takes a note of this and use it should see the benefits. We have used the envelope system for a while now, but trouble it has is when paychecks go up and down. I’m all for it and think with this you should have one for coupons too as that will only help knock down some of the spending on groceries.

By: 7 Unique Ways To Put A Retiree To Work

7 Unique Ways To Put A Retiree To Work — Fri, 28 May 2010 09:14:59 +0000

[...] Paul shares his cash budget envelop system. [...]

By: Steve in W MA

Steve in W MA — Sun, 02 May 2010 04:32:25 +0000

Gwen, on those months that you don’t make it to the bank in time to stock your envelopes, try my method that I described to Bill a couple of posts above: Take an index card and list your envelope allotment for each category on it. Then as you spend, write the amount down on another card (or staple the card or a stack of them together) and then you can either immediately or soon thereafter at the end of the day update the available budget “envelope” balance on the first index card. Now when you spend you can refer to the index card first to see how much is left in your “envelope”.

This could help keep you on the wagon until you make it to the bank to finally stock those envelopes for the month!

By: Steve in W MA

Steve in W MA — Sun, 02 May 2010 04:25:33 +0000

Bill, that’s a great system to keep from getting overdrawn. Since that’s working for you, you may want to go the extra step of creating an envelope budget outline for yourself, then, rather than carrying actual cash envelopes, listing the amounts you intend to spend for each category in the month on an index card in your wallet or taped to your check register. Then not only can you deduct the amounts you spend from your register, you can keep a running tally of how much money is left in your most important discretionary budget categories like food, transportation, entertainment, or whatever. Referring to the card with your monthly spending category balances on it is a great way to reinforce spending by plan as opposed to just spending by your checkbook balance.

Making a budget plan like this is also great for those annual/ occasional expenses like an annual internet access bill or car excise tax. Just allocate 1/12 of the annual cost of the item into your spending category every month and once the year is up and the bill arrives, you are good to go with no surprises.

With this kind of a method actually, referring to your budget becomes almost more important and primary than referring to your checking account balance, because you will have hundreds or thousands of dollars in your checking account that are not really available to spend, but are allocated for various expected future expenses (car repair, car replacement, medical copay fund, whatever).

Keep it up and I think if you give it a try you will find it extremely useful.

By: paul

paul — Wed, 28 Apr 2010 04:25:53 +0000

Way to go Gwen! I wish everyone would believe us that such a simple system can work so very well!

By: Gwen

Gwen — Wed, 28 Apr 2010 02:56:29 +0000

My husband and I have been using the cash envelope system for about six years now. Before doing the system we’d put everything on the credit card (to earn “points”) and always pay it off each month. The thing that still fascinates me since switching is we spend less than we did before and yet I feel like I have more freedom to spend than I did before. I suppose because before I always had the pressure looming over me of the upcoming credit card bill. No longer – it’s easy to see at a glance where our spending is and to make instant decisions of whether we can afford something this month or if we need to cut back or whatever.

We definitely have months where we don’t make it to the bank for our monthly cash allotments and end up using the debit card and we absolutely always spend more those months. Not to mention balancing the checking account is then a pain!

By the way, I use a coupon file instead of envelopes. Granted, I carry a purse, so this is easy for me. But it has thirteen slots and I don’t even have that many budget categories. So I have room for receipts in the front, and a few categories of coupons too.

By: paul

paul — Mon, 26 Apr 2010 14:45:07 +0000

I like Steve’s tips Paige. Incidentally I’m working on a potential product right now to help with exactly the issue you mention. I’ll keep you posted as I move along but there just aren’t many ready made options for us envelope budgeters today.

By: Bill

Bill — Mon, 26 Apr 2010 14:33:43 +0000

I’m not into cash, however a trick I use with plastic; everytime I use my debit card or credit card I deduct the amount from my check book immediatley after the transaction. Yes I usually end up with a negative balance in my check resister and yes I worry about it. As far as I am concerned if you use a credit card you have overdrawn your finances and you need to do something about it at once.

By: Steve in W MA

Steve in W MA — Mon, 26 Apr 2010 01:50:28 +0000

Paige, try cutting the envelopes to within half an inch of to the size you want (say, large enough to fit a folded-over wad of bills in) , then folding the cut end over to make a half-inch flap where you have cut and gluing it with Elmer’s Glue. That way you can have much smaller-sized envelopes.