Question about the envelope budget system

[chalupamom]

We just started using the envelope system for budgeting and at the beginning of the month put our budgeted amount for "household consumables" (i.e., food for people and animals, cleaning products, non-prescription medicinces, etc.) in the envelope. At about halfway through the month it looks like we'll have a bit leftover by the end.

What's the procedure here? Do we:

1) Lower next month's amount by the amount that's left over, going lower and lower until we find the amount that's the bare minimum? (The "use it or loose it" method.)

2) Remove the surplus to a "surplus envelope" and keep the original budgeted amount for the next month, allowing us to accumulate any monthly surpluses to use when we reach a month where things do not go as smoothly so we'll have cash to handle them and the standard monthly budget doesn't change.

3) Keep the surplus in the envelope and add the original budgeted amount, thereby increasing the next month's available budget, but reverting to the original budget once/if surplusses are used.

[weebitty2]

i usually keep the budgeted amount the same, and add the surplus to the "savings" envelope if there's anything left over at the end of the month .. since our savings envelope is split between the savings acct/incidentals/"oops i ran out of gas money" envelope.

[Oh the Irony]

When I did this years ago, I put it in an envelope marked "extra money". My husband got the biggest kick out of this and still teases me about extra money.

I would leave the budgeted amount the same.

[intensity_too]

Yep, we do what the PP mentioned. We just set any extra a side to use during months when we may have spent more in other areas. Usually the money ends up going to things like unexpected medical bills, car repairs, gas money for when we travel home . . . . . We always leave the budgeted amount the same each month.

[westernskies]

removed

[seren]

How can I start doing this system?

[mnnice]

This thread brings up a question for you chalupamom? How did you arrive at the envelope amount? We also started the envelope system at the first of the year. We are doing more to help us track expense as opposed to making us be more disciplined and living within our means. I think we picked to unrealistic of an amount. Frankly, it's driving me crazy already and a fear there will me no money left at the end of the month.


Personally think what you do with the "extra money" has more with the rest of your financial situation and goals. If you have an adequate emergancy fund I would put it to investing (retirement, college savings, ect) or saving for major expense such as replacing a car, house downpayment/home maintance, going on a cool vacation, or paying down a debt early.

[kerc]

i'd put it away and at the end of several months reasses what you have left over. maybe you budgeted too much to go into groceries and too little for car insurance. or in my case vice versa.

extra money...that's a dream. unfortunately that envie is always empty (or darn close!) around here.