In response to Erin's question, when I have money left over in an envelope, I stick it in the bank and send that exact dollar amount right to an outstanding debt. For me, that is medical bills. For me, that has meant sending almost $100 a month (I do my envelopes bi-weekly) extra toward outstanding debt.

Mindy August 24 2010 5:09 PM

In response to Erin's question...our family "lets it ride." There's always a month where more money is needed from one envelope than usual (groceries, if we threw a party or entertained...clothing, right before school starts...date night, if we do something special). We've also been known to borrow/steal from one envelope to provide for another. For example, we once double dated with friends at a restaurant much pricier than our usual date night. We stole $$$ from our grocery budget, and had a "clean out the freezer" kind of 2 weeks, dinner wise. The grocery money also works out very well when we vacation. If we're gone the majority of the 2 week pay period, the cash becomes our road snacks, restaurant and condo groceries money for the trip. Same for date night, since all "dates" occur while on vacation. For us, the beauty of the system is its flexibility.

De Jackson August 14 2010 2:36 PM

What do you do with the money you don't spend in the envelopes? Keep/accumulate money in them, or add it as income next month and divvy it up again?

Erin Kramer August 02 2010 9:58 AM

I'm the "weirdo" out of my friends and career associates...My wife and I have used the envelope system for a couple years now. It is one of the most important steps in controlling that pesky miscellaneous money item in the budget. We use 2 envelopes per paycheck, one for "food and staples", the other simply "other", with other being the smaller of the two. That way we can blow our budgeted envelope wad without blowing our budget. Funny though, the cash in my grubby paws makes me want to save it rather than spend it...couldn't get that warm fuzzy with plastic debit cards...

Craig July 13 2010 2:28 PM

I am very excited to get started on the envelope system. I'm going to try using a coupon holder to hold my cash. I will label it accordingly, and it's small enough to carry in my purse so that I can have it with me at all times. Does anyone else do this?

Lesley July 06 2010 11:25 PM

We are getting ready to begin "enveloping". I like the concepts mentioned here but am concerned about someone breaking into our house or even neighbors or family members taking from the envelopes. (Call me paranoid but I think it is a valid concern) I agree with the pencil pocket for grocery store allocation but would like to know how everyone "hides" the money to keep in their envelopes so that prying eyes are kept from being enticed.

David June 26 2010 9:37 PM

I have 11 envelopes. I get frustrated when I can't put money into all envelopes. Have any of you had to do this? I was thinking of filling which envelopes I could and leave the others and say oh well. Then come the next payday, I put money into the next batch of envelopes that I can fill and not touch the ones I filled last payday. I was also thinking, like for Car Repair. I can't just put in $10 each payday. I if I blew out a tire tomorrow, I wouldn't have enough. I get nervous thinking how long it will take to build it up. I thought of taking most of my money I have left after bills, food and gas and put it all in the car repair envelope. Then the next payday take all the money left over and put it in Home Repair. Build up each envelope one by one with a larger amount of money. Does that makes sense?

Christine June 25 2010 6:21 PM

The cash envelope system has proven to be very effective for me because it has taught me basic financial planning skills for budgeting. So far, I have been able to accommodate for every expense and then some. And because the system is on a cash basis, I no longer depend on my debit card. The end result of just using this system alone gave me a financial surplus of over $700.00. This leads me to believe that I wasted a lot of money that could have been used for investing and saving.

lydia June 16 2010 8:17 PM

I'm excited to try this system of envelopes. The gas card is a good idea, which also give me this idea: if you don't like keeping cash in the house, buy gift cards for grocery stores also. Our elementary sells "scrip" (gift cards to many grocery stores in the area, as well as many other stores/restaurants. It limits the spending, AND helps the school raise money!!

juli June 10 2010 2:07 PM

PS: Forgot to mention, we also have a Gift category, $20 every two weeks. This one is a white clip. I spend very creatively for school friends' birthday parties (never more than $10), and make my own cards with scrap supplies purchased long ago in less frugal days. We have lots of nieces and nephews, but the hope is always that this envelope with have still some cash in it around our own kids' bdays and Christmas. With this in mind, unless the school friend who has invited one of my kids to a party is a very close friend, we tend to easily RSVP NO to many parties (helps that they are usually on Saturdays, and we attend church that evening). My kids are only 7 and 8, so I'm sure this will change over the years. The envelope system will grow and change as we do.

De Jackson June 06 2010 12:14 PM

We've used the envelope system for several years, and it works well for our family. The only part I didn't like in the beginning was carrying around actual envelopes (we also tried snack baggies, with equal disdain). One friend commented on a double date dinner about our "Date Night" envelope - ragged and torn - when I pulled it out...so I decided to use colored paper clips instead. I leave the cash in the envelopes (hidden in a file folder deep in a drawer in my office desk), then take it out as needed, clip it with its own colored paper clip, and add it to my wallet. My family's categories are these (with the color of clip to match): Groceries (Green, as in Green Grocer): This envelope includes the cash we need for Costco and my errand trip of 3 grocery chains very close to my house, which I hit after checking the ads for best meat and produce pricing, and coupon maximization. Most toiletries are paid for out of this envelope, as well. This is one category where I carry at least some of the cash with me most of the time, in case I need to stop for something. We allocate $300 every two weeks. Might be on the high end for some families, but we rarely eat out, use some organics, and absolutely always have whole grains and fresh fruits and veggies in the house. Personal Care (Yellow clip, because my hair is blond): Cash in here goes for family haircuts (we get an extreme friend discount from a friend who owns her own salon). This envelope was tricky to calculate...I get my hair done every 8 weeks instead of 6; hubbie and son need it more often. It took us about a year to get this one evened out. Date Night (Red for red hot): My hubbie and I put away $20 every two weeks for a fun night out or lunch together. We are sometimes able to go out more often than that, but are extremely frugal about it. He sometimes gets free movie tix from work, or a gift card to a restaurant. All go in the envelope together until date night. Clothing (Dark Blue, for blue jeans): This category is quite low for us right now, but is able to be supplemented by Target gift cards and cash given to the kids for their birthdays and Christmas. My hubbie and I each get $40 every two weeks for "mad money." For him, it's usually spent on eating out, coffee house work days, etc. Other than the occasional lunch date with a friend, mine usually goes to an article of clothing I really want, art or journalling supplies, or used books. My mad money is always the unclipped cash in my purse. When it's gone, it's gone. When I need to carry around some of the kids' birthday or Christmas cash, I use a light blue clip for my son, and a pink one for my daughter. We use our ATM card for gas only (easy to keep track of, and we get a slight discount per gallon for using ATM), and our credit card (with cash back rewards) for the occasional online order (airline tickets, etc). I also now have a Kohl's card (after several years of cold turkey from any dept store cards), to be able to receive the percentage discounts members get. I have an empty envelope in the file marked "owed to Kohls." I place the Kohl's receipts in it and then the kids' cash, or my own, in it as needed, and ALWAYS pay the bill in full each month. Each family's system is different, but this is what we've tweaked over the years to work for us. Honestly, I felt like the paper clips made it SO much easier on me. They are just like money clips, and much less obvious...but every bit as effective for staying on our spending plan. God is good, and has blessed our obedience. Many blessings on your own efforts, all!

De Jackson June 06 2010 12:04 PM

I like the idea of the envelope system, and I do have a budget, but I'm too scared to have all that cash in my house. How do you who use it feel about that? Do you hide it somewhere?

Jeanine June 01 2010 12:27 AM

i love the pencil bag idea, mostly because like you said, you can keep a copy of your budget and grocery list with you. i get easily frustrated if i have to carry a thousand things around and i also am very forgetful, so if i write a grocery list i usually leave it at home. if it's in the binder with my money, there's no way i cna forget it. thanks for this tip!!!!!

sharon May 17 2010 2:00 PM

I can't wait to start on this systems! The one area that makes me a little nervous is the gas category. I drive a massive SUV (cause I have 4 kids, and our rural school doesn't offer bus service), so during the school year I'm spending about $400/month on gas. I really don't want to carry that much cash with me, so instead I'll buy gas cards at the beginning of each month. They work like gift cards, so no going over budget.

Erin April 21 2010 8:56 AM

i love being on a budget. you really get to see where your money is going. i really like the idea of the binder and clear pencil bags. i would recommend that everyone be on a budget if you want to save money. i just got started with it and my first month had so many unexpected expenses come up, but i was actually still under budget. its great!!

nicole April 05 2010 2:09 PM

The envelope system keeps me accountable. I use it for set items like gas, groceries, and clothing, but I also set up other infrequent categories such as car fund, vacation, and major appliances. The money for the infrequent categories is put into a savings account until needed. I keep up with how much is available for use by keep track in the ledger in the envelope book.

Patty March 30 2010 9:05 AM

This is my first Pay period with the Envelope System. So far so good. I am more conscious now that I am not swiping with my debit card.

Lisa March 17 2010 3:11 PM

We just started a much more disciplined approach to our budget. In reading other comments/questions about how to handle varying incomes, expenses that don't occur monthly, and which categories earn the "envelope" treatment, I would highly encourage all to purchase Dave Ramsey's book, The Total Money Makeover. All of these concerns are addressed and he provides example budgeting sheets. Well worth it!

Melissa February 13 2010 8:15 AM

The way that I have it set up is this. Things that I would purchase monthly or weekly, groceries, gas, haircuts, prescriptions, etc. are put in cash envelopes. I have a seperate checking account for bills that come up every few months, car registration, trash removal, utilities, etc. I also add an extra $25.00 every pay to that account incase of an unexpected Dr appt. I do grocery shopping and get gas once a week and once the cash is gone it's gone. Mine is still a work in progress but feels so good to see where the money is going and I can show hubby how much things really are.

Stephanie February 07 2010 7:43 PM

I really want to try the envelope system, I think it would help save me from spending money so freely. But my husband and I do not have a set income every week. Any advice?

Danielle February 07 2010 6:44 PM

My husband & I are really struggling with staying on budget. We would love to try the Envelope System, but are not sure where to start. What catergories are used? What about items that do not occur on a daily or weekly basis? Haircuts? Nail Salons? Any advice would be helpful.

kristi January 27 2010 10:37 PM

How do I budget for bills that are due on the 1st of the month and which are paid from funds received the prior month? Which month should the bill/money go to?

Caroline January 25 2010 4:40 PM

Tammy, no I do not carry the envelopes with me. I have a lock box at home (you can find lock boxes at any walmart or office supply store) where I keep the cash in. I only take the cash that I need for that day and no more. Such as gas money and lunch money. The rest I do not touch (bills etc). Whatever cash I do not use I put it in a real bank and I do not take my atm debit card with me. The money that is in the bank there is no need to touch that money. Once I am fully deciplined at controlling my spending then I will move on to another system. I just need some type of money management system now. Hope this helps.

James W January 20 2010 5:28 PM

do you actually carry all the envelopes filled with cash with you? my husband doesn't like the idea of carrying that much cash with me, but confused on how to spend the money if it's not with me. i have no credit card or check card with me anymore.

TAmmy January 19 2010 7:34 PM

I just started the envelope system. A friend told me about it years ago. I just started a new job and I am catching up on some bills. So I have been short from pay period to pay period. Its been tough. So I decided to try the envelope system. And I tried it first with my fuel expense from pay to pay (for me it was every other week or 10 days) I labled ten envelopes...day 1...2...3 etc. and it worked like a charm. So needless to say my trial run worked out well. I finally found a system that worked for me. Dont give up. Dont let anything or anyone keep you from financial freedom. even if you have to resort to "old fashioned" practices. in the end your not stressing about money and thats worth it. Any questions you can email me at jameswhiteiv@gmail.com Good Luck.

James W January 19 2010 6:51 PM

I'm very interested in trying this system out. My husband is not so trilled about the idea. Any advice on how to use it as a couple?

Sequoya January 19 2010 3:50 PM

I am new to DR. A coworker was talking about it a few weeks ago and I was interested in the budgeting. My husband and I only get paid once a month, both on the same day. How do you suggest we set up our system as well as how do you plan for unexpected bills for example I received a medical bill last week that was back from this past June, they finally billed me once all the insurance payments came through? I'd appreciate any suggestions! Thank you :)

Lynn January 18 2010 12:18 AM

I understand the main concept,using cash,and budgeting money away in envelopes.We have been doing this for a while, with grocery, gas & entertainment,what I don't see is how to do this with items that only come up occassionaly. Like hair cuts,school fees,auto tags,the little holidays(valentines day).How do I account monthly for items that may only come up once a year.How do others do this.

Frank January 14 2010 11:45 PM

You can really have envelopes for any category that you want to set yourself a budget on. We even have one for Wally-world since they seemed to get a chunk of our $$ when we went there. We have Groceries, Eating out, Wallyworld, Clothing, Household stuff, Costco.

Bob January 13 2010 5:08 PM

I am also new to DR. I am confused about which catergorys should be use with the envelope system. Is it for all expenses or just food, gas, clothing and entertainment? Any ideas would be helpful. Thanks.

sterk January 09 2010 7:49 PM

I'm new to DR's envelope system (although I have tried similar systems in past)and I have found it to be great! My advice to those just beginning or thinking about trying the system is be patient! At first it does take some time and patience to make it work. Just as the "megamart purchases" require some reconciling and paperwork it is worth it to know you haven't overspent!! The first few months are "labor intensive" while you get your system down and figure out how to handle all the individual categories of spending! I use the cash envelopes and also some small free bank accounts that I can transfer "to and from" as expenses occur. I love the comments and advice of others. Keep it up! Thanks.

Juni Davis January 07 2010 12:15 PM

We started using the envelope system about 6 months ago and have been shocked by how much money we have saved!! My husband bought a mini penaflex and labeled each section with the different categories. The only problem is that you often have to get out the cash and your wallet b/c the wallet has your coins and your store cards you use to get the sales. You can actually buy wallets on-line that are designed with this in mind. Since I have saved so much money, that it my next purchase!

Anna January 07 2010 11:24 AM

I actually decided to pre-pay all of my utilities last year for 12 months using my tax refund. Now, I dont have to worry about paying utility bills each month. I still open the bills to make sure I have a credit balance with them, but its great knowing I dont have to come up with $250-300 each month to pay for them. The way I looked at it was the tax refund really is money I didnt have anyhow, so I wont miss the money sent to the utility companies. You have to pay them anyhow, why not take that burden off your shoulders for 12 months. I LOVE IT folks.

Bob January 06 2010 8:09 PM

the way i handle monthly expenses or even quartely and yearly expenses is to divide the total monthly expenses by 4 weeks and deposit that amount in the "bills" envelope and have a separate envelope for quartely or yearly payments and divide accordingly so that you have the money available when the bill is due. I do also have the standard groceries, restaurant, etc envelopes that i budget for weekly with what is left after bills and savings are allocated. In answer to the above question about the megamart issue..i would pay for everything from one envelope (whichever i spent the most from) and then reconcile when i get home by replacing the money from each appropiate category back to one i spent from but i feel that it depends on the person and if they can handle having to reconcile. It is a job to do but it is possible. Otherwise you may just have to divide everything up at the register and pay for each category separately to help keep your sanity about the whole thing. I feel it is important to stick to the plan no matter what steps you need to take to make it happen.

tracy January 06 2010 8:42 AM

The cash system works because you can see it. When it is gone, then you can't spend or overspend in the wrong category. Everyones life is different so no one system works for everyone. Review your budget to see where you are overspending and what things blow your budget. For me it was dining out, weekend spending, and quarterly type expenses. Now I give myself an envelope for lunch, wkend 1 and wkend 2, and I save for quarterly type expenses so that a lump sum does not blow my budget. It helps with cash flow.

pam January 05 2010 2:22 PM

there is easier ways of implementing the envelope system than doing it physically: use a free (or cheap) software. you can find many offers out there in the web using the envelpe method. the great thing with these softwares is, you can still use debit and credit cards and yet it's easy to stick to your budgeted envelopes. just do a google search with "envelope budget" or similar.

bruno December 20 2009 10:47 PM

OK...I have a question about this. How do you handle a trip to a "mega" mart with the envelope system? For example my trip today, I purchased a gift for my mom for Christmas that I will be reimbursed for from my dad, clothes for my daughter, medicine and food. Do I do separate orders for each category? Attempt to reconcile it once I get home or what? thanks!

Lori December 13 2009 9:19 PM

I love the idea about the binder/clear pencil bags. I'll buy mine tomorrow! Thanks.

Susan December 11 2009 2:04 PM

I don't like the idea of having cash in the house so I opened up 8 free checking accounts minus the checks. I named each account and have automatic withdrawals from certain ones and transer money to the main account and write a check on the others. The bank accounts are really the envelopes.

Scott December 10 2009 9:09 AM

Instead of using paper envelopes, I keep a binder with clear pencil bags. The pencil bags are sturdy and I can write the category and amount on the bag with a permanent pen. I also keep a copy of my budget, grocery lists, and chore list in this binder. It works!

Janice November 08 2009 7:57 AM