We officially started the envelope system only 4 days ago and it has already saved me $75. What I mean is as I was in Walmart I jotted down the nick nack food, clothes and beauty items I would have put in the cart if using the credit or even the debit card. It came out to 48 buckeroos. Then in the past few days I/we have wanted coffee and to swing by the "sandwich shop" for a bite and then burgers the next day. But I didn't have any cash for it so I/we didn't do any of those things. You can only imagine how much I'd sepnd in weeks, months, years not making wise choices with each and every stop at the store.
With that said, the envelope system works. Here is the basic info from Dave Ramsey himself on HOW to make it work. It's easy I promise. Any reason not to do this is called an excuse, especially if you are in debt, are not honest with your spouse about money you spend, have any sort of issue with spending (gambling, binge shopping etc...), or are using any credit cards that DO NOT get paid off each and every month. If you are not in any debt, then congrats!! ;)
Here are a few simple basics for starting a cash envelope system:
viadaveramsey.com
"1.Budget each paycheck. Budget is a dirty word to most people, but you must budget down to the last dime if you're going to successfully implement the envelope system.
2.Divide and conquer. Of course, there will be budget items that you cannot include in your envelope system, like bills paid by check or automatic withdraw. However, you can create categories like food, gas, clothing and entertainment.
3.Fill 'er Up. After you've categorized your cash expenses, fill each envelope with the money allotted for it in your budget. For example, if you allow $100 for clothing, put $100 in cash in your clothing envelope for the month.
4.When it's gone, it's gone. Once you've spent all the money in a given envelope, you're done spending for that category. If you go on a shopping spree and spend the $100 in your clothing envelope, you can't spend any more on clothes until you budget for that category again. That means no visits to the ATM to withdraw more money!
5.Don't be tempted. While debit cards can't get you directly into debt, if used carelessly, they can cause you to over-spend. There's something psychological about spending cash that hurts more than swiping a piece of plastic. If spending cash whenever possible can become a habit, you'll be less likely to over-spend or buy on impulse.
6.Give it time. It will take a few months to perfect your envelope system. Don't give up after a month or two if it's not clicking. You'll get the hang of it and see how beneficial the envelope system is as you dump debt, build wealth, and achieve financial peace! See ... simple!
Certainly, some bills may come in at different times of the month, so you'll need to adjust your written game plan to take it one step further. You need to plan the budget based upon your pay periods.
Say that you get paid twice a month. If you can write down which bills you plan on paying from each paycheck, you will not be left with a surprise bill. Spend each month's income and each individual paycheck on paper before it comes in."
Thanks Dave for the tools for financial freedom.
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My wallet with the envelope system right inside.
LOVE IT!! |
