Envelope Budgeting

I am not bad with money and I am not extravagant in my spending and yet we seem to be getting deeper into debt, there is just never enough. We don’t have a lot of money and what we have is just not going far enough. Slowly the credit card balance is creeping up and I was starting to feel quite anxious and upset every time I thought about the money.

I read a few things on line where people mentioned using the envelope budgeting system. I knew we needed something drastic, a physical way to see how much we have, how much is going out in debit order and what is left to work with. I usually never carry cash. It is always safer not to but at the moment I think it is safer for my mental sanity to get out of debt.

How to Envelope Budget to get out of debt
– The idea is that you make a note of all the debit orders that come off your account and that money gets left in the bank to pay these accounts.
– Critically assess these and see if there are any that you can cut. Phone your car insurance and ask for a better deal, reduce medical aid stop DSTV if you have it or move to a lower package.
– Write categories for all the things that you spend money in the month and also annual expenses. Remember to add car services, car tax and other annual expenses.
– Allocate money to each category – these become your envelopes. It does take some shuffling around to make sure that you cover everything with the amount that is left after the debit orders.
– Draw money and label enveloped with category names and store the money in each envelope, then when you go to buy or pay for that item/category you have to use the envelope.
– Make sure that debt becomes the focus and is paid off as fast as possible

Why it works is that there is no room to guess how much you have left in a month. You quickly see how a coffee here or a quick treat for the kids when out all adds up and busts the budget.

To be honest there is not actually enough for all the envelopes and some are way less than they should be but the focus is to pay off the debit and then hopefully the disposable income will increase and we can beef up some of the envelopes.

It has made us very much more responsible with our money. Not that we were irresponsible before and we always had a rough budget but we got busy and we always thought we were being careful, when in reality with the money coming in we were not being careful enough.

I am also trying to get all our credit card debit in one place. We both had cc from other banks and now we have all these bank accounts that cost money every month just so we can pay off these cards. I want to move them all to the bank we use and then close all the other accounts. I think just doing this will save us R200 a month, every little bit helps.

The most contentious issue has been the smoking envelope. I don’t like that The Geek smokes, he knows that. He wants to stop but there are always life stresses that stop him. But I think seeing the envelope full of money for cigarettes when we can’t pay everything else is harder than he thought it would be. I said when we started that if he got a cigarette envelope then I wanted one for yarn to feed my knitting addiction. Well needless to say there was nothing left for yarn. I joke with him now that he is smoking my wool. But I think it may have actually motivated him to try and stop or at least cut down.

The thought of getting married is actually making me sad, no matter how many corners we cut and how cheaply we do it. Even if we do have it at home to save on venue costs, we still actually don’t have any extra to have a wedding envelope. I think it is going to have to be called off for the foreseeable future.

I will let you know how it goes but I highly recommend using this system to help control the downward spiral, especially if money is tight.

Now the crafty side of me ( not the sly fox but the creative crafty) thinks we need some pretty enevlopes and that my paper ones are not going to last very long. Hmm maybe felt?

Have you tried the envelope system before?

13 thoughts on “Envelope Budgeting

    • So true, too much month at the end of the money. I tried spreadsheets but I need it more restrictive. If you only have R100 in your purse you can only spend that. Card is too easy just to spend more and think it is still in the account.

    • Let me know how it works Cat, I am willing to try anything at this point and yes it is a pain to draw the money but having real tangible money in your hand make you think about it differently when you spend it.

  1. This brought back memories for me. I used envelopes when I first got divorced and had all the bills plus a sneaky old tax bill of R11 000 that suddenly surfaced. Phew it was hard and I fed my kids 2 minute noodles most days. But the envelopes worked. Good luck

    • Glad to know that it works. I know you don’t have to do it forever but just until you get into good habits and the debt is paid off

  2. that’s very interesting Sally! i read “surrendered wife” a decade ago and the author also suggests working with actual cash, and here it is again… i’m on a similar mission. we need to either eat less or buy a farm to grow our own. the cost of groceries are KILLING me.

  3. Pingback: How we make our budget work. » The Blog From Hell

  4. I did a version of this when I was a student and it worked for me. I also know another Mum who has done it recently but with jars instead of envelopes!!

    Hope you clear the debt quickly.

  5. I have heard about this but I haven’t tried it yet. Maybe I will at some point. I am currently tracking ALL my spending which really is a shocker because that coffee and those paperclips and that muffin ALL adds up. And I’m working on an excel spreadsheet. I agree with you though, sometimes one needs more restrictive measures because swiping your card is AWESOME but just not good because you tend to buy unnecessary things because you know that there’s still money in the account.

    ps…will hold thumbs that you won’t need to call off your wedding.

  6. It’s a great idea! Since I’m not legally allowed to have my own bank account in SA, I never kow how much money we have unless the hubby tells me. If I had envelopes, I could more easily keep track of spending (since I do most of the shopping while he’s at work). As for the wedding- what if you asked friends and family to donate time/resources? Like make it a pot luck, or ask people to contribute decorations or grow flowers in their garden to cut and bring for the wedding? Or post on Gumtree an advert for an up and coming photographer (as long as you like their work) to practice at your wedding for free. Just some ideas…!

Leave a Reply