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Monday, June 29, 2009

Are You Using the Envelope System?

Heather Beauty That Moves

The envelope system for budgeting one's money/cash has been written about very nicely in many places on the web. If you are not familiar with this system please check out some great info at the following places:
The Simple Mom
Envelope System Tutorial

For quite some time I have wanted to implement this system for our family. Part of what has kept me from getting started (procrastination aside) was the lack of an 'envelope' that seemed suitable. Standard paper envelopes would be messy and not very secure, could easily tear, and would need regular replacing which seemed wasteful. Plastic pencil cases (I've seen this suggested) seemed a little large and I honestly couldn't get too excited about purchasing a bunch of plastic cases. Eventually, I came to my crafty senses and found my solution lying right in my own supplies.


Following this tutorial, I made four (to start, I bet I'll think of one or two more categories) cloth, reusable zipper pouches, sewed a strip of linen (leaving the edges raw) to the front, and used rubber stamps with fabric ink to spell the words of my cash spending categories. I carefully chose to make these just a bit larger than our American currency, I wanted them to be just big enough.

I used a 7 inch zipper, and cut my fabric pieces (outside and lining) 4.25" x 9". There is a little squaring-up that takes places after all the pieces are attached to the zipper, this combined with seam allowances made these measurements work really nicely for finished money pouches..

My Categories:
Threads (clothing)
Groceries
Gifts
Good Times (dining out, movies, concerts, museums...)

I chose not to use a cash envelope for gas/fuel. Here in the states we can pay at the gas pump with a debit card - having a child in the car it works well to just go ahead and pay this way rather than running into the store with cash for the clerk. Currently, my daughter has been asking to go into the store to pay (if we are using cash), but it is summertime and I just don't see her interest in leaving the warm car lasting through the winter months. ;) So, because I see no long-term pattern here, I skipped making a pouch for petro.

Do any of you use this system? What works for you - what doesn't work? I am so looking forward to the sense of control, organization, and order that I imagine comes with this practice.

As a side note - as I was reading up on this method I read a comment in which someone stated the sense of financial understanding children (even little children) have from being in a family that uses the envelope system - that once the money is gone... it's gone! Such simplicity, of course they get that.

39 comments:

dmoms said...

oh my gosh Heather. Your timing on this is impeccable! I just put CASH into envelopes today. I love these. any chance you will make some up and put them in your shop?

Annodear said...

We recently started doing this, but so far only have en envelope for food ~ groceries -or- eating out ~ and already I can see that we're much more conscious when making our grocery lists, checking what we need against what's on hand, and planning several meals in advance of going to the store.

Trips to Costco (warehouse membership store)come out of a separate budget, and by stocking up on staples, we can make any of a number of meals on any day.

And just for contrast... we used to go to the grocery store several times a week, and each time it seemed like it would cost us $30-50! And that was just when we were going for "milk"; not a "big" shopping trip. We have definitely reined *that* in.

Annodear said...

It would be nice to be able to edit these after posting... "an" envelope.

Actually, tho, our "envelope" is a cloth wallet that has a 'pocket' for receipts (because I like to look them over periodically and track our spending), and a zipper compartment for change.

Anonymous said...

Your envelopes bring back memories. In times when every penny counted I had an envelope for bus fare. And I made sure that I had enough in it till the next paycheck. Did not want to run out of money going to work.
Now that things are not as tight, I ususally have an envelope only at Christmas time, to keep tabs on our spending.
But your envelopes are prettier than anything I have ever used.

Fay said...

I have been doing this for a few months now but I have mine in jars.I love the idea of the cloth pouches that I could then take to the store with me and put the change straight back into.

thresholddweller said...

I really like this idea, but have yet to actually try it for two reasons.

First, I'm not sure how I'd handle stocking up beyond my regular groceries. I tend to buy things when they're on sale, which increases my budget short-term, but gets used long-term. I do like Annodear's idea of having a separate budget for this, though.

Second, I haven't yet decided how I'd want to handle leftovers. Should it go into another category? Roll over to the next month? Or just go into savings?

I'd be interested to know how others deal with these things.

Anonymous said...

nice envelopes!

don't forget savings, emergencies, utilities, repairs etc. these items might be better off at the bank.

onemotherslove said...

Your envelopes are beautiful! Wish I knew how to install a zipper... and that my sewing machine wasn't broken. Guess I need a budget category for saving up to fix it!

Kathryn said...

I haven't used this recently, but i did in college. I was on a very tight budget, & after paying the budgeted bills, i allowed myself $5/day. If i carried it around it would get spent all at once, so i put it in envelopes at the beginning of the week. If i wanted something big, i had to give up spending on some days. Rather like an allowance.

I should start again. Thanks for sharing. :)

Koningskind said...

We have planned to start on July 1st with a kind of envelope-system. But I don't use envelopes but glass jars. For every week of the month I have a jar for grocerie-money.
And per month I have one jar for each of the categories school, gifts and clothing.
Besides these small jars I have a big jar in which we will put the leftovers of our weekly/monthly amounts as a kind of piggy-bank.
In this way our children see how spending and saving works and how each little amount you spend less will be a step towards a big total.

Jennifer Dee said...

This reminds me of my Grandmother who had different purses in the top drawer of her sideboard; each purse contained cash for rent, food, gas and elec, and holiday money, and also one for emergencies (no one had bank accounts in those days). I have always loved this idea and I used to do the same, but in recent years with the advent of online shopping I have slowly given way to using my bank account. Now you have inspired me to go back to this system.

linda said...

We don't use this idea because it seems somewhat risky to keep that much money lying around the house. We live in an urban area and break ins are not uncommon. What we do is we have one for the children. They are money zappers otherwise. The rest is done virtually in a sense, just by keeping track of spending and writing it down on occasion. We have been budgeting for so long that it has become second nature. I think it will become so for anybody if they are consistent. We have limits so we keep those in mind, able to tally things up fairly well that way.

Anonymous said...

I have been using the envelope system for over 40 years. Instead of one envelope for groceries, I have 5, one for each week in the month plus a stockpiling envelope so I can stock up on deals. Often the week 5 envelope is left untouched or added to the stockpile envelope. My weeks run Monday to Sunday so sometimes there actually is a 5th week. I love your 'envelopes'! Mine are just the normal paper ones. During yard sale season I find that I often use leftover food money for yard sale finds. I do most of my gift shopping at yard sales - lots of new articles are available still in the package. I am now working on birthday and Christmas gifts for 2010!

Head Bitch in Charge said...

What a great idea! Unfortunately it would never work in my house. As soon as my husband found out there was cash lying around he'd constantly be raiding it for trips to the pub or to the ice cream shop! He has no concept of the words "save" or "budget".

Callista said...

I use this too! I love this idea because I currently use envelopes and I always have coins falling out. In Canada our $1 and $2 are coins and I was always losing money! I love this! Did you get this idea from Dave Ramsay? I think he's the guru who really promotes the "envelope system". Our life has changed a lot since we began this! Thanks!

Anonymous said...

I just love this. It's so simple and clever. Well done. I find that with two girls in the house ie my daughter and myself, we have an abundance of purses so I have one for groceries, one for the kids activities and one for "the rest", for that read good times. It is a good system isn't it. Karen

Jessica said...

I grew up with the envelope system and I have no idea why I didn't think of using it now as an adult...of course I would need envelopes like yours!

Eva said...

I too have heard of the envelope method...but could never get excited over it. The convience of my debit card is just so nice! It also does nothing to help with my budgeting!!! I absolutely love these pouches, they are beautiful and practical.

katie z said...

We use the cash system, currently with envelopes sent by utilities that we pay online, but I love the idea of zippered ones! We aren't always so good, but it's better than trying to track all the receipts!

littleecofootprints said...

I cannot believe I didnt think of that!!!

We use the envelope system - scrappy paper enevelopes that we re-use againa and again. But not any more! Thanks for the inspiration!

Tricia

annet said...

I have several bank accounts (and a heavily used money-tracking utility on my computer). I get a monthly pension cheque (about 40% of what I used to earn full-time), which goes into a savings account that cannot be tapped by a debit card. Set amounts get deposited into a property taxes account, a travel and insurance account, and my debit account from which I pay utility bills. Credit card (used mostly for auto fuel and home repair stuff) is always paid off every month. I don't carry cash because it's too likely to "disappear" unless I know I'm to spend it at the farmer's market or a particular cash event. I limit myself to $50 a week for grocery purchases and incidentals (this includes any cash withdrawals). I'm usually able to save several hundred dollars a month into an emergency account. But when I was working, I had more extra -- which went to pay off the vehicle and mortgage, so we are basicaly debt-free now.

Ace said...

Ok, you should sell these. They are ADORABLE. Great job!

Many Blessings :)
Ace

Annodear said...

Thresholddweller, I like to take advantage of sales, too ~ I just figure that the amount in the wallet isn't written in stone, and if we run seriously short, I can always transfer some money in.

So far we haven't had much in the way of leftovers, but what remains just stays in the wallet. As it is also for dining out, I figure it will be nice to have a little extra that we can then treat ourselves with.

I really like Anonymous' system of having a stockpiling envelope.

And Heather, you should sell them! Great idea, Ace :-)

Erin aka Conscious Shopper said...

I agree with others that you should sell these. They are beautiful! And I am not that good with a needle.

BJ said...

This is so timely for my family as we have recently been considering starting the envelope method!!

I pay almost all of our bills and utilities online, but have been using a credit card for most other things (doctors bills, groceries, petrol, etc) which we paid off every month. This was actually working okay while we had 2 incomes, and even after i had a baby and we switched down to 1 income we were going okay for about 9 months because we all knew there was just no spare money for non-essentials.

BUT since i returned to work part-time we have gradually become less focused on the budget. In fact we have been going backwards because it is just too easy to spend money on the credit card that we dont actually have.

Thanks for the impetus to get this new (to us) system happening.

Hana said...

That's a wonderful idea! Just like you, I was put off from the envelope system by the idea of impractical paper envelopes getting dirty and torn... but this is perfect - like specialised money purses that you can take with you to the shops, as Fay pointed out.

Karen said...

Heather,

I'd suggest putting them into your shop minus the rubber stamping ... I could get my own fabric stamp and then do as I wish with the name! Or you could sell a stamp with the envelope ... I really would like to buy these from you, as i'm not going to learn to sew for a few more months ... but what a great gift idea they are for when i do!! thanks!!

Nancy said...

I love those envelopes. So cute. Makes me want to re-invent my budget system just so I can have me some cute envelopes! I'll be watching in your shop...

Our 16yo daughter uses the envelope system and she purchased a coupon organizer for it. She likes it. I've implemented a few envelopes for summer expenses with the kiddos -- their pool money, their weekly 'fun' money, and the back-to-school fund. I've wanted to do groceries/gas/entertainment with envelopes but have never made the jump. Maybe I just needed cute envelopes to motivate me!

Moonwaves said...

I used to use envelopes but then moved on to some other way of organising things and have gone through several more since then and am now coming back to the idea of using the envelopes again. I still have the original ones I used and the empty cardboard chocolates box I used to keep them in. It's funny to see how priorities change though as I was looking through the categories a while back and driving lessons was one, which had been crossed out and replaced with car and of course now I haven't had a car for over a year so that one will become train fares I think. Love the idea of these pouches and they are just the kind of small project I need to get started on sewing I think. Thanks!

dawn said...

We have used the envelope system for over 3 years. It works very well. We do not overspend and our children can see where our money goes. We have the same categories as you but we also have ones for vacation, homeschool (for curriculum or field trips), and farm (expenses that I might need to pay for when running errands like chicken scratch or dog food).

annaelizc said...

I love these envelopes! I have wanted to try the envelope system for a while, but just thought i'd end up with a bunch of scruffy torn envelopes and money all over the place. These are so pretty. Although i'm no good at sewing in zips so am going to have to give that a bit of practice first.

Bree said...

I wonder if you could have an envelope with play money in it or scraps of paper representing money for those things you purchase a credit card or PayPal. I know I could use a budget for my fabric and craft stuff, but I mostly shop online. It's just so easy to hit that PayPal button!

deb said...

I am so n love with these, and am going to make some and try to incorporate them into our home.
They could have other uses... thank you!

Lindsey said...

I'm looking to buy something JUST like this for my sis for Christmas... errrrm, are you selling such? :)

Kelly said...

This might be a silly question, but how do print the words "groceries", etc. onto the fabric? I am SO excited about making these!!!

Anonymous said...

For groceries, i purchase a gift card for each store once a month from my local church which gets a percentage of the profit- it's a win-win and keeps me under control each month. If all the money is gone on the card, i don't buy more. the cards are great. i just can't get used to carrying cash around.

l'atelier13 said...

they're so nice.. may I ask where you got your rubber stamps from??

Anonymous said...

We have seriously thought about this idea but our problem is that my husband is self-employed and we never know from month to month what the income will be. There will be months on end with very little and then he'll have a good month or months - we just never know. IMPOSSIBLE to budget! I'd like to hear from others who might be in the same situation. Thanks!

Ashley said...

We have just started using fake money for the envelope system because we have concerns about carrying around cash. There is an envelope labeled "spent" and when we use our debit card for groceries we take the correct amount of money (rounded up) from the grocery envelope and transfer it to the spent envelope.