My wife and I have finally sat down and (re-)created a budget. We had one a while ago and followed it quite well for about a year, then we had some unforseen expenses, made some bad choices, blah blah blah and it all fell apart. Well, it’s back together again. (We’re kind of trying to model it off the Dave Ramsey “envelope method”). I get paid twice per month and we’ll go to the bank and withdraw $X, break into the proper amounts and distribute it among the several envelopes: “groceries”, “household”, “gifts”, “haircuts” etc. This works quite well for us with the only caveat being I don’t know how to carry the money around. What do we actually put it in? Last time my wife made envelopes out of colored construction paper. That was a fine idea, but the paper wears out quickly. And it’s awkward to put it in a lock box or the like. I thought a big wallet-organizer thing would be good, but my wife didn’t like that and she does most of the shopping.
So, tell about your budget plans and how you deal with it. I’m all ears.
Carrying all your household money around as cash in envelopes seems a bit odd and risky, not to mention highly inconvenient. Why not use checks or a checking account debit card? This little envelopes business seems hihgly inefficient.
My parents used the envelope method when we were kids.
When it came to grocery shopping, fo example, my mother just took the money out of the evelope for that week, put it into her purse and went food shopping. Any extra grocery money she had, she squirreled away and did not spend it. That’s how we got family vacations, extra toys at Christmas, etc.
As for the utility bills, etc., they followed the same practice. When it came time to make the rounds to pay the electric bill, the water bill, etc., they withdrew the money from their envelope system and went to pay the bills. For utility bills, though, if there was any excess left over each month it went into a special ulitity envelope. That helped pay for any unforeseen utility expenses, often in winter when staying warm was important. One thing they did was round up the budget. That way there was always extra cash left over every month. It was never spent.
I used to track my income and expenses first with accounting paper and later with computer programs (like Quicken). I always rounded up my projected budget and always had a surplus every month. That’s how I managed to build savings. Eventually I deliberately budgeted savings into my accounting.
It all comes down to discipline. If you have it, it matters not how you set up your budget plan because you will always money. If you don’t have discipline, it matters not how you set up your budget plan because you will always be short.
astro, we don’t carry them around with us all the time. And we have all the regular bills (mortgage/gas/electric/water/phone etc) debited from our account and we use debit cards for gassing up the cars. This system presents some issues when you want to buy something and don’t have the proper envelope with you, which is good and bad as it prevents impulse buys but is inconvenient when you find something unexpectedly you were looking for. It allows you, though, to know exactly how much you can spend and where it goes. I’m fine with it.
A lot of people who spend too much in plastic and “fake money” find it easier to budget with “real money”. I’m going to try it as soon as I start making some.
Seriously - I think I could hold myself to not overspending if I could actually see my money in my wallet.
We ended up doing something much simpler to get our financial act together and save for a house. We knew that we weren’t organized to have a groceries envelope, a clothes envelope, an entertainment envelope, etc. So we added up the car payments, rent, and utilities, and subtracted that from what we made.
Then we subtracted off what we wanted to save a month, then divided the rest by 4. Ended up with about $300/week for “everything else”. I got $100, she got $200. Every Friday, where we went out to would depend on how much was left in our wallets. Sometimes it was dinner and a movie, sometimes it was McDonalds.
astro, some of us are very highly prone to overdrawing our accounts when we use checks and cards for daily sorts of purchases. It’s awfully easy to spend plastic money you don’t have, but pretty difficult to spend cash you don’t have. And yes, it is inefficient to not have the appropriate envelope on hand to pay for something you decide to pick up. That’s sort of the point. It forcibly keeps you from just randomly buying shit that’s not in the budget.
And, of course, you don’t carry around the entire budget for the whole freakin’ month in your purse. Most people don’t, anyway. Most folks either just take what envelopes they think they’ll need that day when they leave in the morning, or they just take what their estimated expenses from the appropriate envelopes and leave the rest at home.
In the OP’s case, I’d suggest subdividing the money into primary envelopes that stay in the house, and secondary envelopes that you carry around with you. That way nobody’s carrying around the entire monthly allowance for anything at any given time. I’d put the primary envelopes in a safe location in the house, like a lockbox or similar, so that you’ve both got access to them as needed. Then I’d either get some cheap business envelopes (you can usually get a box of 100 for a buck or so at Dollar Store type places, cheaper than you can get construction paper) or a bunch of rubber bands, for dividing the money you each carry around. If your wife is fine with carrying around various envelopes in her purse, she can get a handful of the cheap business envelopes, mark them appropriately, and stock them as needed from the primary envelopes. As you say, they’ll wear out relatively quickly, but you’ve got a big stock of cheap ones and can replace them as needed. Or you can get rubber bands to keep the grocery money seperate from the haircut money in the purse or wallet.
For my personal expenses, I usually follow a system like the one LordVor describes. I put money into Dr.J’s account for joint bills, either pay or set aside money to pay my personal bills, set aside enough to cover expenses I know I’ll have over the course of the pay period (gas, pet supplies if we’re getting low, haircut if I need one, that sort of thing), and the rest is what I have to spend on everything else.
Canadianguy and I use the automatic deduction and interact method. We don’t actually take any money out of the bank: we use interact for everything and have automatic deductions taken out wherever we can. We also have our employers deposit our pays directly into our banks (mine to savings, his to chequing for bills).
We find the less we actually handle cash, the better. If we have $20, we would probably spend it so we try not to use cash.
Budgeting via cash envelopes on one end, and pure cashless digital transactions on the other. I am left alone in the middle to support the impulse purchase economy. The VISA carrying cheese stands alone .
No, the some measure of self-control cheese stands alone.
Not that I think it’s good that you’re the only one in the thread with enough self-control to be in the middle, mind you, but I do think it’s great that you don’t have to resort to such extreme measures to keep yourself in check. You also have to keep in mind that this thread is most decidedly not a representative sample. Pretty much the only people posting here are going to be the ones who have trouble going down the middle. So you’re probably not nearly so alone as you think.
Interestingly enough, I’m exactly the opposite. I am usually quite good at not buying things I can’t afford on plastic, but whenever I open up my wallet and see $50-100, my brain goes: “Sweet! We’re rich! Champagne, caviar, and new DVD box sets for all!”
So I try to carry only enough cash to have some when I need to make change for a split restaurant bill.
iamthewalrus(:3= and Canadiangirl, the beauty of the envelope or similar such methods is that any cash you have with you, well, cash that is in the “blow” envelope, is yours to spend on whatever. But once it’s gone, you wait till the next pay period. I used to think I was good with money and disciplined, and to a certain extent I am, but I have learned that if I have cash, I spend it. We don’t use credit cards to buy expensive clothes or fancy dinners or such, we just have a lot of “life” to pay for. Kids cost money, houses and cars need upkeep. This way I can still blow money and know that the water bill and the electric bill are being paid. No worries. By being this strict, I actually feel more free. Yippee!
(Of course, this is still the first week, I’ll report more in a few weeks )
ONe idea we’ve come up with, and it works quite well, is that we use our airmiles mastercard for all expenses during the month - dinners, groceries, gas, etc. We pay it off at the end of the month. But, while we don’t get enough airmiles to actually go anywhere, we cash them in for grocery coupons at christmas and buy all of our christmas dinner, new years dinnder (usually make something with seafood which is expensive) and enough coupons left for treats we would never usually have (mine is smoked salmon).
While it works for budgetting (you can really see where your money goes), it also works for using the card to your advantage. As long as you don’t pay interest, you actually are using money to make money.
We also always pay ourselves first: we have automatic deductions for our rrsp which I believe is equivalent to a 401k in the U.S. (I could be wrong) and that is our savings for the future. That way, the money goes in every month and starts making interest right away (ING pays best interest in their RRSP investment savings).
Just some suggestions for making your money and credit card make benefits and money for you. It’s taken us a long time for finalize this financial plan and we’re kinda proud of ourselves because we work fairly hard at it (mostly because we want to retire early!).
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