Today we’re going back to budgeting basics with Budgeting Envelopes….
It’s one thing to sit yourself down, work out your monthly budget and decided how much you should be spending on what but actually sticking to it is a whole different ball game.
Paying by card is so much more convenient these days, as is paying using your phone or even a wristband you can simply hold over a machine but they can make it that bit harder to keep track of what you’re actually spending can’t they?
I wanted to share my budgeting envelopes system with you today because it makes it much easier to keep track of what you spend each week and helps reduce the chances of you overspending massively.
Before I start though, I will say that I don’t use this system every week anymore – I used to when I first started setting myself weekly budgets but as I got the hang of it, I started to manage things better in my head than I could before. Now I tend to go weeks, sometimes months without needing my trusty budgeting envelopes and then I’ll have a month where I overspend and need to get my head back in the game so I’ll use them again the following month.
It’s a very simple idea but it’s so so effective!
I usually have five different envelopes, each one labelled as follows:
- Food shopping.
- Petrol.
- School stuff.
- Fun stuff.
- Extras
I then fill each envelope with the amount of money that I have budgeted for that week for that particular category.
Food shopping and petrol are simple as the amounts for those are taken straight from our monthly budget.
School stuff includes things like school dinner money and any extras that I know are needed that month like payments for school trips and anything else like that.
The fun stuff envelope contains an ever-changing about depending on how much money we actually have spare that month, whether there are school holidays in the month and what time of year it is (Summer is cheaper as there’s so much more fun to be had outside). We decide how to spend that money as a family so it could be one larger family activity or a few smaller ones – it could be a day out, a new board game or even a takeaway. Last Summer we even spent some on a fire pit so we could roast marshmallows.
The amount of money in the extras envelope is another one that changes from month to month based on what I know we have going on and again, how much money we have spare that month. Things like work nights out, Birthdays, and even haircuts might be accounted for in this envelope.
At the start of the week, Mr Frugal will put petrol in the cars and I’ll pop the shopping budget into my purse for that week. Anything else we just take out when we need it throughout the week.
Budgeting envelopes help us to keep track of our money because we can see at a glance how much money we have left to go before the end of the week and we know when we’ve hit our budget because the envelopes are empty! We always have spare in the bank on the off chance that we do run out of money if something does cost more than expected but that’s rarely called for when we use the envelope system because it makes us focus on what we’re spending more.
You don’t need anything fancy to use as your envelopes but I do have a free cash envelope template that you can print out if you want to have some nice colourful ones.
Have you ever tried to use the cash envelopes system?
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