Has any one ever used the envelope system for budgeting? I am now working one job and got behind on my bills. I just can't seem to hold on to my money. I am now getting paid bi-weekly. How can I start the envelope system and what amount should go into each of the envelopes till my next paycheck? Remember I only get paid bi-weekly. Thanks for your help.
By balbal from Boston, MA
If I remember it correctly the envelop system is very easy. You get several envelopes and on each one you right the name of a bill starting with the most important "must" pay bills, such as rent/mortgage, car payment, electric, water, sewer, etc. Things you must pay every month.
Next you make envelopes for "essential" items/bills, like groceries, medication, gas, etc. Things you "have" to have in order to stay healthy and to support the "must" pay list above.
Then you set aside envelopes for things you "like" to have each month. Things like eating out once a month. Coffee at work, an occasional soda, renting a movie, cable/satellite service. These are things you would like to have, but are not essential or must pay bills.
On each envelope you put the name of what it is for, the dollar amount and the due date. Put the envelopes in order by due date. Things that don't have a due date are slipped in where they will fit based on when you get your money and making sure that the bills get paid on time. If you have more due than you have money you may be able to get the due date moved. Call the company and ask. If not, you may have to pay something earlier than when it is due, maybe even before the due notice arrives.
The last thing is to have an envelope for savings. This envelope is important and off limits. You put money in and it never comes out unless you are going to lose something otherwise. It is good if you get a slightly larger envelope for this one so it doesn't bulge with the money you are saving. Some people say you should make a goal as to how much you want to save and to what end. You save up that much money and spend it as delegated. Then start over. I say if you fill the envelope up you seal it and start a new one.
Anyway, these are the basics of the envelope system. One variation is you leave your money in your bank account and write a check for each envelope. When you go to pay your bills the money is already in the bank, your check is already recorded in your registry and all you have to do is put it in your bill's envelope and mail it.
Good luck. (09/12/2010)
We used the envelope method for a long time, until someone broke into our house and stole them. Now we keep the money in the bank, but keep the amounts in a separate ledger to keep track of the balances, deposits, and withdrawals. It's a great system! (09/15/2010)
What might be easier for you is what I do. I get paid biweekly also. I divide my monthly bills by which bills are due the first half and which are due the second half. When I get paid, I pay bills according to due date. Only whatever is left is spent on food, entertainment, etc. I did not really include groceries as a budget item, but you could if you wanted to. Good luck. (09/15/2010)
By Cindy S.
My husband and I still do this, and we still have a bank account. The envelope system is really simple.
Label each envelope with a bill, my husband and I even made an envelope for savings and vacation/eating out. Then divide each amount of each bill by 2 if you get paid biweekly or 4 if you get paid weekly. The number you end up with will be what you need to put in every week. For example our rent is $600 a month we get paid weekly so it is 150 a week in the envelope. We estimate what our electric bill is to do that one. Simple as that. I will add that if you really have a hard time not spending money when you know it's just sitting there it is going to be hard at first, but gets easier as you go, you will be surprised how much extra money you will have saved or extra if you can really stick to the plan. (09/15/2010)
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