Haven't heard of the "Envelope System?"
I can't say enough good things about the envelope system. To me, it's the easiest way to stick to a budget. Lately I've just been spending extra time each day working out debit or credit card receipts and tracking them online, then recording them into a spreadsheet or something, except I almost always procrastinate for a few weeks until I kinda lose track.
We have been able to stay out of debt and have the security of an emergency fund since we got married in 2008, and I can't tell you the difference it has made in being able to share our money or make life decisions without the stress that comes from living paycheck to paycheck. I give much of the credit for this to the fact that we have used the envelope system the whole time.
If you want to learn more specifics about using a cash based/envelope system, I highly recommend that you read Dave Ramsey's book "The Total Money Makeover." (The link is not working for some reason, but you can use the Amazon.com search box on my sidebar to order yourself a copy.)
You can also read a little more about the envelope system at Dave Ramsey's website here: daveramsey.com.
Here are the basics:
Get yourself some envelopes
You can use the link above to order a fancy schmancy little system to keep in your purse, or you can be a little less classy (like me) and use one of those couponing folders with the slots in it. They are a couple bucks, and mine has lasted for 2 years now.
|This is what it looks like. Except I found this picture here: on the internet.|
Label your envelopes (or slots)
If you've never kept a budget, then it might take you a while to figure out what all of your monthly expenses are. Just start with what you can think of, and keep adding/altering as you think of them. Ours are:
Grocery Store/Food (this includes restaurant meals - our weakness for sure!)
Blow money is the money set aside for stuff that doesn't fall into any of the other categories, or if you "blow your budget" a little bit and need some extra cash when another envelope gets empty too soon. It always happens. You need a blow fund.
Stuff your envelopes
Figure out how much you spend each month on each category, write it down, and that's how much cash you put in each envelope each month. I keep a spread sheet on my computer to keep track of it. Also, this help me keep track of bills we pay online (internet, electric, city/water, donation, etc.).
Give yourself some time and grace
Dave Ramsey says it takes three months to make it work for you. I found that to be true, and we keep tweaking things to make it work best for us. Remember, the system is supposed to work for you, and not the other way around. :)
Now, we have a jar on our mantle right now that I call the "Samuel Jar". (Samuel was a boy in the Bible who his mother had to pray and wait a really long time for... kind of like us and our little boy.) At the end of the month, anything left in the envelopes is going into the jar. This is an amazing visual reminder for us of the importance of pinching our pennies right now!