It seems like forever ago that I was first introduced to the envelope system. Our system has evolved so much in the 10 years that I/we (single and married life) have been using it. That is just the perk of the Envelope System though. As your life changes, there is this incredible ability to change the system to make it work for you too.
What is the envelope system, you might ask.
Dave Ramsey (www.daveramsey.com), financial guru, author, speaker, talk show host, markets and talks about using the envelope system in a few of his books and in the Financial Peace University. He is a huge advocate for using the Envelope System for those expenses that may come up every few months, once a year, or completely unannounced. These would include expenses such as car repairs and maintenance, clothing, new furniture, groceries, etc. Of course, he also is a proponent for saving for an emergency fund for those bigger unannounced expenses. For more information on each of his “Baby Steps” read “Total Money Makeover” or look in your community for the next Financial Peace University class (FPU can also be done online).
Let’s take a closer look at my envelopes.
Just a fore mention, currently we are doing less envelopes as we do not have room in our budget for items such as clothing, home decor, and car maintenance. We have a bit of money stockpiled in these envelopes just in case. So here is a list of what we have envelopes for, how much currently goes into them each month, and what we do and do not spend the money for (if applicable).
- Home decor- We do not currently contribute to this right now. In the past, we have used this for furniture, decor, necessaries like towels/wash cloths, etc. We have ranged from dumping in $150/month to $20/month based on what we foresee ourselves needing. Now that we own a home, it could be used for home repairs, but it is not really in the month to month budget.
- Special Events- This is for date nights, birthdays, anniversary, and potentially holidays. We usually put in $20-$40/month in this envelope. It really helps the eating out budget on those special months and the grocery budget come the Christmas duck and ham trip.
- Groceries- Okay, so it took me a great deal of convincing before I finally started doing this one envelope. You can read more about my grocery spending and saving in my post here. Ever since the beginning of 2016, I have used my grocery envelope and there is a definite reduction in spending. We budget $450/month every month. I pull out $250 in the beginning of the month because I go to Costco. The rest of the money will be used for the second half of the month.
- Car maintenance- We use to stock this envelope up prior to getting different cars. I mean, we had $800 in there at any given time. My old car was costing us about $1000-$1500 every year to get fixed. That doesn’t even include regular maintenance! Now, we only contribute $50 a month, but we do have a bit of a cushion in there if needed. The biyearly registration will also come from this envelope.
- Becca’s Clothing- In our pre-baby, decent income years we contributed a pretty hefty amount to our clothing envelopes. I remember putting about $200 each month, yes, a month, into this envelope. Since my shopping hiatus I have taken a very different view of clothing. Now, we add just $20 a month to this envelope.
Becca’s Work Clothing-I don’t buy many scrubs unless I switch a job. My biggest expense is my shoes. I wear MBT shoes for work since I walk or stand for 13 hours, I figure they are a good investment. So I save anywhere from $20-$30 per month for these. Look them up! They are amazing, but they are worth saving for. (edited, I no longer am working as a nurse!)
- Mr. Hubster’s Clothing- Same as my clothing budget, just $20 a month.
Mr. Hubster’s Work Clothing-You wouldn’t believe me unless I laid it out here. My husband loves to shop! For golf clothes anyway. He is Ricky Fowler-esk with his golf attire. Think bright colors, crazy pants, and matching shoes. So, stuff ain’t cheap! He gets $40 per month for this envelope. (edited, he no longer has to purchase work clothing as his job provides it).
- Medical- This is also one that is only stocked and we do not contribute every month. We have been lucky to not have any medical expenses besides our possible over the counter medications. We will be stocking this one, also, before we even think about getting pregnant again!
- Pet Envelope- Now, this one is tricky. We buy our cat food and litter outright and then we add the remaining budget to the envelope if we didn’t spend it all. So we allot $200 to this every month. Yeah, they can be expensive and if they ever have to have a procedure done it is crazy expensive too! Best to save up for your fur babies so you never have to make the tough decision about not being able to afford something emergent for them.
- Personal Upkeep- I cut Little Misters and Mr. Hubsters hair so we don’t have that expense. I don’t do anything extravagant like coloring hair or nails done so this is minimum. We put in $20 each month for this.
- Little Man’s Envelope- This envelope is designated for Little Misters monthly book, clothing, shoes, and sometimes a toy. We will also put money he receives for holidays in here and use it throughout the year. We only allot $20 here.
- Becca’s Fun Money- Every month we give ourselves just a tiny bit of fun money so that we can buy or do things that we want to do without putting strain on our monthly budget. In this season of life, we only get $50 each month. It is just enough for a meal out and maybe some sewing items for myself. In other seasons we have had as much as $200 each month. I really don’t know what I would do with that much fun money now. I just cannot bring myself to spend much these days.
- Mr. Hubster’s Fun Money- Same as with my own, Mr. Hubster gets $50 each month. The difference is that he is the spender and really thinks this is too little. Having 2 different views on spending is, well, interesting.
- Family Activities- We really like to do free stuff, but every once in a while we like to do something that costs us just a bit of money. This budget is great for those months. We only contribute $20-$40 each month, but if we don’t use it for a few months then it really adds up.
- Becca’s Licenses- Being a nurse, I have to pay for a yearly or biannual (depending on the state in which I practice) license renewal. I also have to pay for continuing education credits which are not cheap. We plan for this by putting in $10 each month. (Even though I am not currently working, I am keeping my license active).
So, I know what you may be thinking…
“Wow! she has a lot of envelopes!” or “why would I need to put $10 in an envelope each month, it is such a small amount?”. And here is my explanation. Everyone is so different with why they feel like they need an envelope. Over the past 10 years the envelopes that we have kept has changed a lot and the amounts we place in each has changed a lot. This is really what works best for us in this season of life. We make just enough for all of our expenses and a little for envelopes. When we are a two income family, our income will change and so will our envelope allotment. As far as the little amounts for a few of the envelopes goes, if I get my hair cut for $30 plus get some hair product every 6 months it will cost me about $50. That would be hard for our monthly budget. But with our envelope system, $10 is totally doable!
I hope this encourages you to make your own envelope system and possibly even get on a budget. Read more about our financial road here.
Just one last thing!
Oh, and I use paper envelopes (yep, I am a paper kind of gal), but there are some super cute handmade envelope systems on Etsy. Here are some links to some great ones!!! (these are not affiliate links, they are just systems that I hope you will enjoy).
For the lady who wants to keep your wallet and your envelopes together in one pretty spot! Here is Citrus Designs shop.
If you are new to budgeting and really want to save, but also really want some pretty envelopes check these pretty ones out! Here is Mazie Magnolia‘s shop.
Updated with new information September 2017