Anybody use the "envelope system"?

[Anonymous]

Why so rude, PP? We went to a financial planner to see if retirement was on track, to have him give us his opinion on my husband's employee stock plan, advise is on upcoming home and car purchases (how much cash to put down, best methods to finance, etc.). He also looked at our budget and suggested trimming some areas given some upcoming changes to our lifestyle. Does this make us stupid? I think it makes us smart.

[Anonymous]

Anonymous wrote:I use the envelope system in the absolutely traditional way: around the first of the month I withdraw the monthly cash for these categories: groceries, eating out, household (toilet paper, cleaning supplies, etc.) entertainment, kids splurge, and "blow." I take it home and split it up - half goes around with me and half stays in the safe until halfway through the month.

It has been HUGELY helpful for us. It is so hard to give people my hard-earned cash that I'm always taking things off the conveyor belt at Target instead of buying them. We estimate that we're saving at least $500/month in "little" things that we wouldn't have thought about before - hitting Subway on the way home, buying extras at Target, getting the giant sized popcorn at the movies, etc.

Works well for us!

+1 million
I have been doing this for 6 months now. Withdraw a set amount every other week. Love to count hard cash, plan out how many $20 bills I am going to spend, keep track of what is left. And whipping out that credit card was really a pain.
Spend on groceries, eat out, household stuff, doctors/Rx, entertainment, field trips. I splurge leftover cash too on home decor and personal items. I am so much more conscious of my payday and paycheck amount now.

[Anonymous]

I think this sounds great and its exactly what we want to do--except I hate carrying a purse so I typically grab id and debit card. If I have cash with me I sometimes worry I will lose it or I worry that it will be stolen-with my atm I can call and immediately cancel if I lose that. Mint isn't bad as it tracks my every purchase and puts it in a category. I have only had it a few days and I want to learn more about using it and trying to set it up for my budget vs the pre-planned budget it sets.

[Anonymous]

PP, YNAB is great for exactly the reasons you mention - it is like the envelope system, but allows you to use your cards. We did the cash system for a while but it didn't help us with all the things we needed to be accounting for, all the bills you pay only quarterly, or planning for Christmas, or buying gas with a credit card. YNAB has saved our financial solvency. It isn't the most intuitive software, but still worth it.

[Anonymous]

Anonymous wrote:OP here. I just wanted to thank the user who suggested YNAB. My husband and I are on the free trial, but I think we'll end up buying it. It's been really helpful to see how we spend our money, and having the app on our phones makes it SO much easier and more effective than our old method of filling everything in at the end of the month based on credit card statements.

Was going to suggest YNAB but I see you're already using it. Agree, great system.

[Anonymous]

Anonymous wrote:More discussion of this here:
http://www.dcurbanmom.com/jforum/posts/list/353383.page

NP here, I read this thread and don't see any info about using prepaid credit cards to manage the envelope-based budget. My college student is going to have her first almost full-time job this year and we are trying to setup a budget system for her. She has downloaded a few apps to try out. She likes the convenience of a card over cash so I think prepaid credit cards might be the solution.

Any more thoughts or links?

Thanks!

[Anonymous]

1) OP, how is your Financial Advisor compensated? Fee-only, I hope, otherwise they will eventually lead you down a merry path. Check out http://www.napfa.org/ if you really need this kind of handholding.

2) Your problem is not eating out too much or that extra starbucks. Check out "All Your Worth"
http://www.getrichslowly.org/blog/2007/12/03/book-review-all-your-worth/

You probably need to change your fixed expenses percentage or make more money.

All this time stuffing envelopes or tracking transactions in an app; could you use that time to pick up some more work or apply for a better job?

[Anonymous]

Anonymous wrote:1) OP, how is your Financial Advisor compensated? Fee-only, I hope, otherwise they will eventually lead you down a merry path. Check out http://www.napfa.org/ if you really need this kind of handholding.

2) Your problem is not eating out too much or that extra starbucks. Check out "All Your Worth"
http://www.getrichslowly.org/blog/2007/12/03/book-review-all-your-worth/

You probably need to change your fixed expenses percentage or make more money.

All this time stuffing envelopes or tracking transactions in an app; could you use that time to pick up some more work or apply for a better job?

I'm not OP, but I can't imagine it taking more than a few minutes each day to do this once the initial budget itself is set up. That's not enough time to look for a second job or work one.


I spent most of my 20s working 2-3 jobs in the thought that all I needed to fix my financial issues was to earn more money. At one point, I earned more per hour than I do now (albeit in contract work). It didn't fix my problems because I didn't budget. I grew up poor enough that you had to spend all you had just to survive. Then I was married to a man from an upper middle class family who had compulsive spending issues. After the divorce was the first time I'd ever made a budget. I am trying to teach my children good financial habits. The older one will work 30 hrs a week this year at college. She's never had that type of money before and won't have many expenses beyond her apartment and meals. I think that the envelopes will work for her,but she's a digital native who hates dealing with cash. That's why I asked last night about the prepaid credit cards.