Creating and staying on a budget can be very difficult especially during the Holiday Season. The demands on our wallets can leave us in danger of going not only over budget but also into debt… In this article I will talk about a system that our family has adopted that has helped to give us a better understanding of where our money is going and how we put it to use!
I will be honest it’s been very difficult for my husband and I who are both pretty ‘go with the flow’ kind of people to take the initiative to really find out where all of our money is going! The idea of a strict budget sounded so confining and I’m not really a numbers person either so the process of setting a budget always eluded me because it just seemed like too much to take on… and the years passed. It’s not that we are really irresponsible and we don’t have really bad spending habits per se but we seriously had no idea where our money was going each month! We had been saying that exact phrase for years “where does all of our money go!?” So this lead me to seek the wisdom of others and what they were doing and everyone seemed to have their own system or way they chose to track their spending but again nothing seemed to connect with our way of thinking or was easy enough to implement… and the years passed.
In the middle of this year I actually had the opportunity to attend a seminar on finances based on the popular book by Dave Ramsey the author of The Total Money Makeover. This program was a crash course in the principles of that book and the information I received that day inspired me again to really start to find a way to figure out a better system to be accountable for our spending. I applied several of the baby steps that the instructor encouraged and laid out and felt more confident about finally tackling our lack of budget.
Several weeks went by and I had lunch with a friend who was telling me about all of the costs of prepping for back to school. I could totally relate! She began to tell me that they had been implementing a Cash Envelope system that had given them great success in managing their money simply and easily! This was very intriguing to me to go to an all cash system based on the fact that I have been using a debit card for all of my adult life and barely ever have cash! As she went on I began to think this may be a valid option for me… It didn’t sound too difficult and I knew it was something I could implement even buy our next paycheck. As you may guessed by now I never read “The Total Money Makeover” because had I taken the time I would have realized this too was part of the books principles. So now it was all coming together despite my lack of reading and my friend showed me her ‘SpendVelpoes‘ as they were called and told me where she order them online and I was sold!
I’m going to share how I Implemented this system personally but by no means am I any type of financial advisor. I can only speak from my experience and I hope you take it for what it’s worth and that it’s helpful to you!
These are the steps I took in order to get on a Cash System –
1) I pulled up our bank account online and assessed the last several months of transactions that were authorized to come out of our account by auto-withdraw. The goal is to leave enough in your bank account to cover your expenses that are automatically withdrawn from your account and then withdraw the rest into the Spendvelops.
2) I created a list of all of our automatic withdrawals. In our case we get paid bi-monthly so I split the month into two – the 1st of the month to the 15th and the 16th through the end of the month. By the time I was done reconciling our auto-withdraws it was roughly even amounts being taken out automatically during both pay periods which made it easy! (If you realize upon reconciling your auto-withdraw list that you are very disproportionate during a certain pay period I would suggest switching your payment due date/dates to have a more balanced auto-withdraw cycle in place for the month. Most companies will happily accommodate.)
3) At this point I took the initiative to modify several auto debits I thought we could live without or explore other opinions to save us money! I had learned that when your looking for ways to create ‘more’ money within your budget it is directly correlated to how much you’re saving yourself! Take this time to eliminate or renegotiate any unnecessary or overpriced expenses you may have uncovered.
4) After my list was complete I had an accurate reflection of not only how much I needed to leave in my account to cover auto-withdrawals but also how much we had left in our budget to distribute among the Spendvelops! Easy is that! After all these years of putting this off I had now created a budget within about 45 minutes that I could actually follow!
5) Now equipped with the information I needed I simply called my bank and within the automated system requested an ATM Debit Card limit increase in order to withdraw the more substantial amount to fill my envelopes with cash for the next two week period! This sounds like a simple step but certain banks have limits on increases and also ATM’s as well so be sure to note your bank’s policies unless you have a convenient local institution you can easily frequent.
6) The next thing you will want to do is identify the categories that you would like to designate each envelope for within your budget. The envelopes come in a colorful variety so each one can be clearly recognized once you to get the hang of it! Some examples of the budget categories I chose for our family were; Gas, Grocery, Dining Out, Personal Care (for Dog Food, Kids Items, Toiletry items Ect), Entertainment, Savings, and so on. These will be determined based on your family and budget and you could go as simplistic or as complex with the categories as you want!
7) Implementing the system. I was really guesstimating the first time around when I filled each envelope, knowing that I would probably have to modify some amounts higher or lower for the next round so I wrote on each with a pencil next to the category the amount I was designating for the two weeks. I had all my pretty colorful envelopes all in a row and explained to my husband to NOT to use his debit card any longer because the money left in the account was designated for the purposes of our auto-withdrawals. Then simply grab the cash you need from whatever envelope depending on what the expenses for and we would be fine! This would now give us a much more accurate reflection of where our money was going and it has been fun to now really have a picture of how we spend and also save for that matter when we; you guessed it, KNOW where our money is going.
3 Easy Action Steps ~
- Get your Spendvelopes Today!
- Check out Dave Ramsey’s “Total Money Makeover”
- Be ready to say “no” to some things so you can say ‘YES’ to more important things! Our view of nice dinners out and excessive spending has changed since we have set this system in play. It has really given us the ability to make better choices in where our money goes and for that I am grateful!
Leave a Reply
You must be logged in to post a comment.