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Tuesday, July 21, 2009

The Envelope System

I’m sure most have heard of “the Envelope System” many have probably even given it a try. However if your like me and you look in that tiny little “have fun” envelope and see not so much, spend it, and then everyone wants to go do something….


Then you “borrow” a little from the “electric bill” envelope, don’t worry you’ll pay yourself back…..

The envelope system isn’t going to work for you.

This is a system that will work!! (says everyone) But you have to be disciplined….

Here is how it works:

You write down all of your bills and then get a separate envelope for each, so for me it would be eight envelopes…

  • electric
  • water
  • propane
  • mortgage
  • car payment
  • gas
  • groceries
  • fun/date night

(that’s off the top of my head)

Then on the outside of the envelope you write down the typical amount you pay for each:

  • $90/month (electric)
  • $70/month (water)
  • $400/year (propane)
  • $620/month (mortgage)
  • $280/month (car payment)
  • $50/week (gas)
  • $150/week (groceries)
  • $200/week (fun/date night)

You then need to come up with a “budget” as to how you are going to fill each envelope every week/month/year….

Currently we separate my husband’s paycheck into each envelope.

The key to making this system work for you is to be consistent, and disciplined. I have to hide the bill envelopes from myself so that what I have in the fun/date night or groceries envelopes are what I have and that’s it!

This also works well if you want to open separate accounts at your bank and use the “envelope” system only with accounts. You can even get separate cards for your separate accounts and write the name of each right on your card! I think that would take even more discipline, but it would be more organized. You can have your paychecks directly deposited into each account as well.

Basically it’s whatever works for you. This is just a budgeting idea I know works for many people. If you have any questions please feel free to ask! I would be happy to help!!

1 comment:

  1. I love this post... I'm been trying different ways to budget my money! I have a similar system that works well for me (being a college student)! You seem to have it figured out :-)


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