Monday, July 22, 2013

My Version: Cash Envelope System

If you have been around the blog awhile, you would have read a nice little post titled: FML . . . Student Loans.
 Basically it just recaps how much I loathe our student loans and what new systems we are trying to set in place to help reduce them. 


What we decided on was to do a modified version of Dave Ramsey's cash envelope system. 



Our version goes a little something like this:

- There are many budget printables floating around the web - but I easily created my own with just a simple pen and piece of paper. 
I starting by writing down everything I thought we spent money on. 


My list: 
Rent, car loans, student loans, insurance, cable, cell phones, electric, gas, cc bill {the months we have one}, tithe. 
These are the things that get automatically withdrawn from our account, so they don't go in an envelope. 

Christmas money, groceries, gas, entertainment (weekly money as a couple- can be used on dinner, movies, zoo, etc) , beauty (nails, spray tan, hair cut), tickets (we are big sports fans so this will cover our trips and actual tickets) , gifts (baby showers, birthdays) , lunch, prescriptions, dr. bills, car registration/tax, bentley, play (hobby lobby, car wash, toys, etc). 
These are things we have envelopes for and will pay strictly cash for. 



- The purpose is to assign every dollar a category.
 At the moment we have a good amount in savings so we don't have a separate category for that, but Dave Ramsey says you should have $1000 in an emergency fund. 


- Most categories don't 'roll over', so if the money isn't spent at the end of the month it will get divided into two place: savings & which ever loan we want to pay off first. 
Then there are categories that 'roll over' {i.e. - Christmas, tickets, car reg/tax, bentley, play} which will continue adding up all year. If we have left over money in those categories at the end of the year we will do the same thing, divide it up. The point is to budget all year for the roll over categories so there isn't a big chunk of change missing one month. 


- So, since I get paid bi-weekly and Christian get's paid monthly, what works best for us is that since his paycheck gets direct deposited we keep that in there for the automatic bills, and we cash most of my paycheck to put in the envelopes. 

{How funny do you think I looked the first time asking for hundreds of dollars in mostly tens and fives. Needless to say it was a lengthy bank trip that day.}



The first few months will take a little adjusting. What I have found is that we may have to adjust our numbers each month based on our electric, gas, and dr. bills, the things that really vary month to month. Since this is our first month doing this budget thing, I will find a printable that will allow me to keep track of the budgeted amount and the actual spent amount. This way I will be able to look back of the months and see any trends, etc, and where I need to adjust my numbers.

I also discovered that I have a few more categories to add: ct gift, tt gift (christmas, birthday, anniversary, valentines), for the home (new pans, sheets, any bigger purchases), vacation, and car maintenance. 



Do you do a similar budget? What do you do different that might benefit myself and other newbie budgeters? 


PS- Check out here for my crafted version on the cash envelopes. 
That is until I find time to make a fabric one! 




2 comments:

  1. Looks great!!! We really need to do this again!!

    ReplyDelete
    Replies
    1. Veronica told me about a program last night that is very similar to this but it helps you track how much you've spent each month so you can keep it in any account and not so much cash out. It's called YNAB. I might have to look into it. So basically you have all this money in your account, you assign every dollar a place, insert those into the categories, and each month you put into this app how much you have spent in those categories as you go. You never look at the total in your accounts {because that would make it seem like you have soo much there} but look at the individual categories and see if you have enough funds to make a purchase.

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