The envelope system has garnered high praise in the pf blogiverse for reining in spending and helping people to get out of debt. The Cliff’s notes version of the system is:
- Figure out your budgeted amount for each category.
- Write the category on the envelope.
- Put the money allotted for the week/two weeks/month in the envelope.
- If any money is left over at the end of the allotted time, either cycle it into the next period of time or transfer it into a goal envelope (debt repayment, trip to Hawaii, Chanel Coat).
- When you run out of cash in the envelope, you are out…period.
I think the envelope system has a lot of advantages, but haven’t tried it. Why not? First, I love my automated bill pay. Secondly, our income fluctuates (sometimes wildly), so I don’t want to move everything at the end of the month into a goal, because that income might be desperately needed in the bank for the next month.
However, our food budget has taken on a life of its own. Out of everything I try to keep control over, I have had the least success in the groceries and eating out categories. I talked with my husband today, and we are going to try a modified envelope system.
Every budget category except for groceries and gas are on automatic billpay, so we are only creating envelopes for those two categories and my new job pays every two weeks, so our envelopes are going to be bi-weekly. My goal is to cut down on groceries enough to cover a monthly meal out for us.
How will this work? Well, I’ll let you know.