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I'm trying to design a budget and was wondering if those following the envelope system (is that the Dave Ramsey plan?) could help me by telling me their envelope categories. I don't have a clue where to start with the categories, but we are spending way too much money. For example, we'll go over our grocery budget and not think twice about it, make multiple trips to the grocery store, etc. DH frequently spends money on the way to work for breakfast sandwiches and energy drinks. We're not making any big purchases, but we're also blowing money on little things that *seem* inconsequential until they add up.<br><br>
Please help with envelope categories. Thanks!<br><br>
Also, please assist with the basic rules, such as what to do with money saved from one category, etc.
 

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I only do envelopes for 2 categories. We overspend on food and pocket money, so those are the two envelopes I carry. I put cash in the envelopes (a coin purse really) every two weeks. When the money is gone, it is gone and we don't spend any further.<br><br>
We never have money left over, since I keep our budget super tight. If anything, we have to do without something until our next paycheck. If I did have money left over, I would just roll it into the next cycle and have a little extra that round.<br><br>
And we were in the same boat -- the big expenses were nailed down tight, but money seemed to flow out of our account anyway. Turns out, we could spend a lot of money on odds and ends.
 

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I just do my own system.. this is what we have:<br><br>
Rent/mortgage<br>
Utilities (gas, cable/internet, power/water/sewer/trash)<br>
Gas for cars<br>
Insurance<br>
Food/non-food groceries<br>
DH's spending money<br>
My spending money<br>
Gift money (birthdays mostly)<br><br>
We don't have a car payment, but if you do you'd want to add one for that too, and any of your other bills like student loans.<br><br>
This is what we did, now we leave most of our money in our bank accounts for bills and pull out the spending, groceries, and gift money, and use cash for those.<br><br>
ETA: I also over-estimate bills that fluctuate, like power and gas money so that we're not short on them when the time comes to pay it.. that extra money just rolls over into the next month.
 

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We use envelopes for monthly expenses that are variable. Gas, Groceries, Gifts/Entertainment. And things have been so tight lately, that gifts/entertainment are by the wayside. I could make an argument for a "clothing" envelope. But that's on hold for us too.
 

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Discussion Starter #5
Thanks so much for the responses!<br><br>
Does anyone have envelopes for things like haircuts or personal items like cosmetics and eye cream, etc.?<br><br>
Also, when it comes to Family Fun money, how much would be a good amount for a family of 5? (That's what we'll be for the summer, as my stepdaughters will be visiting and I want to have fun--but also not blow the budget.)
 

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I use mvelopes, which is virtual envelopes in our bank account. With that, I have lots and lots of categories--one for haircuts, one for clothing (which includes dry cleaning), one for gifts, one for eating out, one for entertainment, etc, etc.<br><br>
But, the only ones that we usually do in cash is groceries, our cash/fun money, and sometimes entertainment (especially for vacation).<br><br>
For us, our cash/weekly/pocket money would cover breakfast sandwiches, energy drinks, etc. For me, it covers small things I want to do with my kids during the week, like ice cream or the $2 museum admission or the money to get into the public pool or whatever. Bigger things (like our annual zoo membership) would come out of our entertainment fund. This is just what works for us, but you could do it however works for you.<br><br>
When we go on vacation, we like to take cash, cause it's easier to see how much we have spent. We aren't really going to high pick pocket areas, so that's not a big deal for us.
 

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<div>Originally Posted by <strong>PoetryLover</strong> <a href="/community/forum/post/15419057"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Thanks so much for the responses!<br><br>
Does anyone have envelopes for things like haircuts or personal items like cosmetics and eye cream, etc.?<br></div>
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Stuff like that would come out of my personal spending allowance.
 

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I think another way to do envelopes is to write down what you think are reasonable expenditures for your categories and then just spend from a single envelope. The first month or two I would write down what you actually spend the items on. We use a single envelope method for several years sucessfully. I love the simplicity of this method and how easy it is to keep exact track of where you are for the month.<br><br>
I would include an amount for clothes and shoes, toiletries, gifts, dry cleaning. We also include gas and minor car maintainance (oil changes, wiper blades, air filters) but not more major stuff like new sets of tires or repairs.<br><br>
We have always budgeted 25% to 30% during June, July and August than we do the rest of the year because it's important to have more cash to do stuff like weekend camping, festivals, DH's golf. We are able to do that by dropping cable for the summer nearly every year and because in the past we have traditionally had several hundred dollars of childcare during the school year, but none in the summer.
 

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We don't use physical envelopes of cash, but I use Quicken and track a LOT of categories.<br><br>
A few thoughts:<br><br>
~ Have you tracked your actual spending for a few months? It is easier to build a reliable and realistic budget when you know what you really spend.<br><br>
~ There are multiple ways of achieving the same goal. You can go cold turkey and slash the budget and figure out the details along the way. You can track your spending for a couple months and ease your family into a new frugal lifestyle over a few months. You can track spending for several months and ease your family into a more frugal lifestyle over a year. And lots of other speeds/styles. What works for you will depend on a lot of factors: starting point, end goal, level of determination, family dynamics/cooperation, income level, etc.<br><br>
~ For a fun family-oriented summer, start checking out the web to find all the free local events now. Summer concert series, free museum days, movies in the park, summer movie programs (theaters), crafts/project days at big box stores (some are free), free classes around town, guided nature walks, etc. Poll the family and start writing these free activities in the calendar first. Then check out low cost activities, such as half-price days at local attractions, kids eat free restaurants, classes/crafts/project days around town with a low fee, etc. Poll the family and choose a few for the calendar. Then fill in with non-scheduled freebies and low cost activities: library, playgrounds, beach, parks, nature walks/hikes, pool, playdates, etc. If there is one very popular place with your family that does cost something substantial, is the fee tax-deductible? For us, we get one family annual pass per year to a local attraction that is a non-profit organization and take the tax write-off AND enjoy family fun days. Examples: zoo, aquarium, museums. We rotate which one each year and we just schedule it once a month year-round, so we don't get bored.<br><br>
~ For us, all haircuts come out of "beauty", as do other such services (brow waxes for me once in awhile). Cosmetics and other physical items sometimes come out of "beauty" and sometimes come out of "household" and sometimes come out of my own personal spending. It depends.<br><br>
~ In my Quicken budget, I track categories monthly and I track them yearly. When I set up a new budget (spending plan is what I actually call it), I average some categories and take the highest for other categories and take the lowest for yet other categories. It all depends on past experiences.<br><br>
~ I use the highest actual monthly amount for telephone, gas & electric, cable & internet, and gas for the cars. These are expenses that we have far less than control over than meets the eye. The choices are keep and pay the going rate or drop. Our family has reached the lowest usage possible already, although I do call the cell and cable companies several times a year to ask for lower plans. (We bottomed out several years ago, but I keep requesting. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"> ) Our driving habits use the lease fuel possible for our family, so the rest is dependent upon the price of fuel. If there is extra in any of these categories in any given month, it just sits in the checking account to buffer any highs elsewhere that month (equivalent of moving the cash to another category in that month).<br><br>
~ I budget an average of last year's actual expenses for most categories. I'll go slightly below the average when it is a category we want to reduce. "Dining" is the one we've worked the hardest on for the last few years. I'll go slightly above the average if it is a category we suspect the costs are going to increase or we want to increase this category. "Food" is the one for us. We've worked to drastically decrease our dining out (for health reasons more than financial) while consciously raising the food dollars to sustain a healthier diet. The net amount spent is lower overall, but it has taken work on my part. Most categories are a straight average and I leave the money in place to balance out the high months and low months (equivalent to leaving the cash in that envelope month-to-month).<br><br>
~ There were a few categories where I budgeted the lowest amount spent last year for the coming year. These were categories I want to phase out (beauty is an example) or they just aren't a focus this year (furniture and clothing are examples). In the case of "beauty", it was important for me to figure out this sneaky category and gain control over it and now it is stable enough to combine with another category. For the first half of the year, I plan to leave any extra funds each month in the given category for a cushion (equivalent to leaving cash in that envelope month-to-month). For the second half of the year, I may switch to using it for the month elsewhere if I haven't used it (equivalent to moving the cash to a different envelope). There are two small pieces of furniture I am still looking for and I am waiting to find the perfect pieces, so I will leave the funds there for that category. If I find them this year, then I'll drop that category altogether next year. If I don't find one or both this year, I'll adjust the category amount next year.
 

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I keep ours very specific otherwise the contents drift away easier since it's easier to say that whatever counts. If I know I'm robbing Paul to pay Marry, it's easier to tell Marry to shove off.<br><ul><li>Gas wk. 1</li>
<li>Gas wk. 2</li>
<li>Gas wk. 3</li>
<li>Gas wk. 4</li>
<li>Family Activity</li>
<li>Childcare</li>
<li>Gifts</li>
<li>Clothing/seasonal</li>
<li>un-planned food purchases</li>
<li>Personal care</li>
<li>DS allowance</li>
</ul><br>
When need be:
<ul><li>Gas wk. 5</li>
<li>Oil Change</li>
<li>Library Fees</li>
<li>School prizes</li>
<li>Archery</li>
<li>....anything else that comes up.</li>
</ul><br>
I don't do personal spending money 'cause I just get too frivolous with it. I DO spend the $1-5 leftovers on myself or whatever little things pop up. I don't know that I've ever left money in an envelope/rolled it over/done something productive with it unless I've used none of it and it will do for next month or unless I know something big is coming next month and want to save for it specifically...
 

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Oh.. I also wanted to add we have emergency money too.. this goes to things like a flat tire/car repair, a trip to the DR... stuff like that.
 

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I had a food envelope, a pet food envelope, a childcare & copay envelope (just because the two required cash), I also had an envelope for my "allowance". Since we have moved, I have quit using envelopes because I don't have a local bank anymore and can't w/d something like $435 without a fee or in $20 increments. We did SO much better when I was using cash.
 

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I use paper envelopes and keep them in my security lock box until the bills are paid..<br><br>
I get paid every two weeks so this is done bi-weekly and half of every bill is put in that envelope so the $$ is there when the bill is due..My bills pretty much run the same every month so I know what to take out.<br><br>
Envelope 1...Rent<br>
Envelope 2...Electric<br>
Envelope 3...phone line<br><br>
Car insurance ect..I pay in full at income tax time for the year to give me breathing room..<br><br>
That is it..I have exactly 100.00 every two weeks left over after I take money out for these bills..I gas up,buy toiletries and diapers..I use peppermint soap,vineger and bleach for cleaning..I do buy unscented laundrey soap that comes out of this.<br><br>
I have a 2nd partime job..That money is for groceries..I don't envelope that..I just take it out of my account and go shopping with a list.<br><br>
I also babysit a little boy on Saturdays..That money if I don't need it for something like shoes ect...is for fun..Or extra groceries.<br><br>
It is pretty tight for us but this envelope system works well for my needs..It shows me exactly where my $$ is going..<br><br>
Things like Daycare,health insurances ect...are taken directly out of my paycheck before I recieve it..I work for the hospital that has a daycare that my little one attends.So I don't have to envelope those bills either.
 

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We work all summer for cash, and then go to school the rest of the year, so we have to be VERY careful with our envelopes, as when the money is gone the money is GONE! We are learning more and more every year and this fall will be our 3rd year of living with an envelope system. (we use a safe to hold our envelopes. We put the regular size envelopes into 1 large manilla envelope for each month.)<br><br>
The envelope system has been a fanancial lifesaver. Dh and I have become so much more responsible with money, we've learned frugality and how to save. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/love.gif" style="border:0px solid;" title="love"><br><br>
Our monthly envelopes:<br><br>
rent<br>
electric (our heat is electric so it's combined)<br>
cell phone<br>
gas<br>
groceries<br>
spending<br><br>
One time envelopes:<br>
car insurance<br>
water/sewer<br><br><br>
Envelopes we would like to implement this fall if we have the money:<br><br>
cosmetics, skin and hair care products, etc<br>
gifts<br>
clothing and shoes<br>
travel (we visit our parents 3.5 hours away once every 6 - 8 weeks, and the gas and other expenses of going on these weekend trips has blown our spending budget and then we have nothing for the rest of the month.)<br><br><img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/thumb.gif" style="border:0px solid;" title="thumbs up">
 

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Discussion Starter #15
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>sunnysandiegan</strong> <a href="/community/forum/post/15419470"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">We don't use physical envelopes of cash, but I use Quicken and track a LOT of categories.<br><br>
A few thoughts:<br><br>
~ Have you tracked your actual spending for a few months? It is easier to build a reliable and realistic budget when you know what you really spend.<br><br>
~ There are multiple ways of achieving the same goal. You can go cold turkey and slash the budget and figure out the details along the way. You can track your spending for a couple months and ease your family into a new frugal lifestyle over a few months. You can track spending for several months and ease your family into a more frugal lifestyle over a year. And lots of other speeds/styles. What works for you will depend on a lot of factors: starting point, end goal, level of determination, family dynamics/cooperation, income level, etc.<br><br>
~ For a fun family-oriented summer, start checking out the web to find all the free local events now. Summer concert series, free museum days, movies in the park, summer movie programs (theaters), crafts/project days at big box stores (some are free), free classes around town, guided nature walks, etc. Poll the family and start writing these free activities in the calendar first. Then check out low cost activities, such as half-price days at local attractions, kids eat free restaurants, classes/crafts/project days around town with a low fee, etc. Poll the family and choose a few for the calendar. Then fill in with non-scheduled freebies and low cost activities: library, playgrounds, beach, parks, nature walks/hikes, pool, playdates, etc. If there is one very popular place with your family that does cost something substantial, is the fee tax-deductible? For us, we get one family annual pass per year to a local attraction that is a non-profit organization and take the tax write-off AND enjoy family fun days. Examples: zoo, aquarium, museums. We rotate which one each year and we just schedule it once a month year-round, so we don't get bored.<br><br>
~ For us, all haircuts come out of "beauty", as do other such services (brow waxes for me once in awhile). Cosmetics and other physical items sometimes come out of "beauty" and sometimes come out of "household" and sometimes come out of my own personal spending. It depends.<br><br>
~ In my Quicken budget, I track categories monthly and I track them yearly. When I set up a new budget (spending plan is what I actually call it), I average some categories and take the highest for other categories and take the lowest for yet other categories. It all depends on past experiences.<br><br>
~ I use the highest actual monthly amount for telephone, gas & electric, cable & internet, and gas for the cars. These are expenses that we have far less than control over than meets the eye. The choices are keep and pay the going rate or drop. Our family has reached the lowest usage possible already, although I do call the cell and cable companies several times a year to ask for lower plans. (We bottomed out several years ago, but I keep requesting. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"> ) Our driving habits use the lease fuel possible for our family, so the rest is dependent upon the price of fuel. If there is extra in any of these categories in any given month, it just sits in the checking account to buffer any highs elsewhere that month (equivalent of moving the cash to another category in that month).<br><br>
~ I budget an average of last year's actual expenses for most categories. I'll go slightly below the average when it is a category we want to reduce. "Dining" is the one we've worked the hardest on for the last few years. I'll go slightly above the average if it is a category we suspect the costs are going to increase or we want to increase this category. "Food" is the one for us. We've worked to drastically decrease our dining out (for health reasons more than financial) while consciously raising the food dollars to sustain a healthier diet. The net amount spent is lower overall, but it has taken work on my part. Most categories are a straight average and I leave the money in place to balance out the high months and low months (equivalent to leaving the cash in that envelope month-to-month).<br><br>
~ There were a few categories where I budgeted the lowest amount spent last year for the coming year. These were categories I want to phase out (beauty is an example) or they just aren't a focus this year (furniture and clothing are examples). In the case of "beauty", it was important for me to figure out this sneaky category and gain control over it and now it is stable enough to combine with another category. For the first half of the year, I plan to leave any extra funds each month in the given category for a cushion (equivalent to leaving cash in that envelope month-to-month). For the second half of the year, I may switch to using it for the month elsewhere if I haven't used it (equivalent to moving the cash to a different envelope). There are two small pieces of furniture I am still looking for and I am waiting to find the perfect pieces, so I will leave the funds there for that category. If I find them this year, then I'll drop that category altogether next year. If I don't find one or both this year, I'll adjust the category amount next year.</div>
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Thanks so much for your post. I always appreciate your posts because you go into such great detail and it is a huge help. Thanks for the time you spent writing all this. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/orngbiggrin.gif" style="border:0px solid;" title="orange big grin">
 

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Discussion Starter #16
Thanks to everyone for sharing your envelope systems! All of your replies were very helpful. I apologize for taking so much time to get back to you, but I don't have so much computer time lately.
 

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We just use the envelopes for areas where we are prone to overspend. So all our monthly bills come out electronically, and we use envelopes for the following things: Pets, Grocery, Fun money, House fund, and personal allowances (we each have our own envelope). Any money left over, or not spent during the month, is kept in the envelope so that it rolls over to the following month. This is particullarly important for pets (vet bills are large when they happen!) and the house fund (many items cost more than the monthly amount.) We set the values by looking at what we usually spent each month, talking about what was reasonable, and going from there. We've adjusted them from time to time as needed.
 

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I'm reworking our budget right now but what we've currently been doing is: The budget includes set bills (ins, phone, etc), variable bills (electric and water - amt estimated off highest expected amount), cash categories (groceries, gas, household). I have the amount for each bill/category listed and know how much needs to come out each week for us to have the monthly total. Any extra that is made goes into our house budget since we're trying to get a new place. We do have a savings acct for back up and the house budget is technically just going into savings right now so we still have extra money if it is needed for something unexpected. I need to rework a new system but this is what has been working for us.
 

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We use envelopes for everything except our mortgage, student loan, and car payment, all of which are pulled automatically from our savings (so we just put the money straight into that account). These are our categories: Gas, Groceries, Utilities, Dish Bill, Day Care (we pay cash), Household items, Baby necessities, Pet stuff, Visa payment, Cell phones, and Blow money.<br><br>
As far as the grocery budget goes, we go twice a month to the store and when the money is gone we don't buy anything else. I try to make sure that there's always $2 sitting in that envelope so that if we run out of milk or something like that we can go and pick it up. We've really learned to cut back on the extras and the eating out!
 
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