Tuesday, September 25, 2012

Budgeting When Money is Tight: Part 5

I hope this series has been helpful for you in some regard!  I'd LOVE to hear what has been helpful, impacting, challenging, etc. during this series.  Leave a comment below if you want to share something!

Today we will be discussing a little more in depth the concept of Envelope Budgeting (found in Part 1).  Switching to envelopes can seem a little overwhelming, but rest assured, you will quickly get the hang of it!  If you've missed the other parts in the series, check them out here: Part 2, Part 3, Part 4.

How Do I Do My Envelopes?

If you are looking to get started with envelope budgeting but aren't sure how to break up the categories, I am listing below the categories that we use.  You can do an envelope for anything!  Plain white envelopes work great, especially when you are first starting and figuring out which categories you'll actually use.  Once you have established more permanent envelope categories, check out my homemade envelopes HERE to add some fun to budgeting ;)

Here are my envelope categories:

Kids (includes diapers and their clothing)
Healthcare premiums
Car Maintenance
Car Registrations
Dr.'s Co-Pays
Special item savings
Hair cuts

Some of these categories are small ("gifts" only gets $5-$10 per month) and others are big (grocery gets $400 per month, kids gets $40-$50 per month).  ALL of our spending is done this way, with the exception of our tithe, savings, rent, gas in our cars, and basic bills & payments.

I do have a set amount for each of these categories, however it does fluctuate depending on our income.  Certain categories are skipped in rough months (such as hair cuts, our personal money, gifts, and special item savings), others always get the designated amount (car categories, grocery, health).

In our case, my paychecks are devoted to our cash envelopes.  Every other week I sit down with my money book, write down all my envelope categories with how much I need to go in them, how much I actually put in them, and the running balance of each envelope.  I always make a note of any envelopes that got skipped due to a smaller paycheck, and I make sure to add the missed amount on the next cycle if the paycheck is better.

This is also when I redistribute any "left over" funds from my grocery category (I allow most other categories to just "roll" from month to month).  I'll take the left over funds and move it to either special item savings, a birthday party (if one is coming up), or pantry stock-up items.

Thinking of giving envelope budgeting a try?  Sit down with a pen and paper and write down all the categories that you'd like to include.  Write down how much each category will get, and how often (once a month with the full amounts, twice a month with half amounts?).  

This is the final post of this series.  I understand that there were things that I touched on that I have not expanded on...I will work on getting to all those different topics over time (coupons, drugstore game, etc.), they are just not a part of this series.  I hope this has been helpful, and I'd LOVE it if you'd leave a comment sharing something you learned, are processing, are going to try, or a tip of your own for the other readers.  Thanks!


  1. Thanks for the series. So great to see others taking care of their finances and being good stewards of their money.
    It's so important to know where your money is going. I really like that you have a system that has worked for your family. I also like that you have found creative ways to make your finances stretch. That is always encouraging to read about!
    We have had a budget for the past few years and have become better at managing it over time. One word of advice to the other readers out there is that creating a budget and sticking with it takes time and process. We are still trying to "figure it out." The more you stick with it, the better you are at managing your finances.
    Thanks for all the great tips!

  2. I definitely do not have any advice, but our family is currently trying some of these things. It's nice to see it layed out in steps and I really appreciate how you have broken down the envelope categories. That is always a struggle for us. I also have found encouragement from your optimism. We also have had some medical things come up with lots of unexpected bills. Plus our student loans, etc. I am a mom of 2 small children with #3 on the way! I also have to work part time for now and am always looking for ways to decrease our budget to be home with them! Thanks for your posts!

  3. I agree, Jami, it does feel like we are always constantly "figuring it out" because aspects of our finances & life are always changing!

    Michelle-It sounds like we have a lot in common! Congrats on #3! I'm so glad that this series was helpful for you! Medical stuff is SO hard to deal with. You can totally do it, though! Keep with it! Thanks for reading ;)

  4. We have kept track of where our money goes on line in a budget program (mint) it can get fancy with all types of graphs and stuff which I don't use as much as I could. I do like not having to remember what I spend my money on cause it downloads the transactions from our bank. I have to be honest with myself cause you can smudge the figures to MAKE the figures look good when they are really are not. Good stuff



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