Frugal Finances Plan

Revamping my Envelope Budgeting System

We’ve always had a budget and we have had varying degrees of success in sticking to it. However, recently, I have found that my system no longer seems to be working for me and that a bit of adjustment is necessary in order to maintain a healthy financial management system.

As in our homeschool and my home keeping, I find that what worked for me in the beginning, might not work for me in my current season in life and thus a trip back to the drawing board might be necessary. 

In going through this process in re-looking at how I budget I realised that the reason my system was no longer working is that I had allowed myself to drift off into the lake of complacency. My system worked, so I set aside all my ‘controls’ and allowed myself to go with the flow. Fortunately, being the one who keeps an eye on how things run I was able to pick up fairly quickly the error of my ways and get this side of running a home back on track.

Today I want to show you my age-old system that’s been given a bit of a ‘spring clean’.

I have always used the envelope system for my housekeeping expenses. I’m sure you know how it works, when you get your paycheck you draw out your budgeted housekeeping, divide it equally over the weeks in the month, then put that weeks’ money in your wallet leaving the rest at home. 

So that has worked fairly well for the most part BUT… I hit a few snags. First, sometimes I would forget to put the weeks’ money in my wallet, get to the store, do my shop and the realise my mistake when I got to the checkout. So I would pull out my debit card silently resolving to deposit that money from my cash at home. Well… that didn’t always happen. As a result, I had an overspend which affected the overall budget.

Secondly, other budgeted amounts – like family entertainment and fuel – were left in the account. As you know it is way easier to pull out your debit card to pay and overrun your budgeted amount – again affecting the overall budget. 

Now I really like my envelope system – it works, but I needed to take it one step further.


Step 1 – Determine what envelopes I need

I re-looked at what envelopes I had, if they still served the purpose and whether some needed retiring or new ones implemented. Here’s what I came up with:

I needed 4 envelopes for my housekeeping, one for each week of the month, the last week’s envelope will have a slightly higher proportion of money because it covers that extra couple of days leading up to the 30th or 31st.

I needed one envelope for our family entertainment – this is no longer left in the account. It’s drawn out and when it’s gone it’s gone.

One envelope for Car Maintenance – I realised that I never actually put money for our car services etc. I just left it and assumed that it would come out of ‘disposable’, but from what I can understand from what I’ve read about the David Ramsey’s financial budgeting method is that this is not good enough – you actually have to take that money out whether physically or transferring it into a specific savings account set aside for that. 

I have also decided to start saving, making, buying for Christmas early this year so I have an envelope for that too. After all – Christmas is not a surprise, it comes around every year and we should plan for that to avoid going into debt.

**I’ve actually ordered David Ramsey’s ‘Total Money Makeover’ book and I am excited to learn more about his money makeover advice. I’m sure that this will call for a further financial makeover later this year.

Finally, I have an envelope for my fuel money.

Step 2 – Making the Envelopes

I found a great free template from the blog My Life All In One Place. I downloaded the free envelope template, then traced it out on pretty card stock because I want them to be durable and last a while. Next, I made some pretty labels for each envelope, I used the Graphics Fairy  free images for some of them.

Step 3 – The Working Wallet

Now this bit was the really important ‘working’ bit. I needed something that could house the housekeeping, entertainment, and fuel envelopes. The other envelopes will be stuffed at the beginning of each month and stored in the safe.

Enter my Filofax Pennybridge Compact Organiser – pictured in all these photographs.

I have used the Pennybridge Filofax as my wallet for over a year now, it has space for all my store loyalty cards, coins and those handy rings which I was under-utilising. Now the envelopes with the money I need are on those rings so I shall never have the excuse that I left an envelope at home again 😊.

The wallet is not bulky or heavy – an important consideration when you have to lug it about with you. It also has a zipper which means all is kept safe and contained in a neat and orderly fashion – music to my heart.

So there we have it – the envelope budgeting system just got itself an overhaul and I have to say…I’m rather pleased with how it turned out. 

This post has been shared with The Art of Home-making Mondays at Strangers and Pilgrims on Earth.

(3) Comments

  1. Gill says:

    A few questions, that may seem silly. It all sounds wonderful when you start the month with envelopes full of notes, but what about half way through the month? Do you have coins jingling in each envelope ( and I know all too well how bulky British coinage is)? And if so, how do you stop yourself raiding one envelope for "another 5p"? And do you carry the whole amount around with you, including the Christmas savings etc? I'm a bit confused here 🙂 I must admit that I admire everyone that manages to work to a planned budget with cash. Sadly many of our Norwegian stores and facilities will NO LONGER ACCEPT CASH! Even our bus and train tickets cost significantly more if paid for in cash. It's a strange world nowadays!

    1. Shirley-Ann says:

      Hi Gill, thanks for your comment and questions.

      The Christmas savings and Car Maintainance envelopes are left at home in the safe – so I don't carry those around with me at all.

      In my Pennybridge organiser I have 4 envelopes, one for each week of the month, and that is my housekeeping/grocery money. Starting at the beginning of each week I will take that weeks money out of the envelope and put it into the cash section of my wallet. There is a zipper section for coins so I wont have any small change rattling about. When the next week comes along I will take the money from the next envelope and put it into the cash section and so on.

      Raiding one envelope for another – yes, it can be tempting to do so but this is where you need to exercise a measure of self-control :). At the beginning of each month I plan a months worth of meals on a calendar. It is from this meal plan that I am able to create a weekly shopping list, knowing exactly what it is that I need to purchase. If I stick to the shopping list (and I do plan baking and treats within that meal plan) I'm usually okay with keeping within my weeks allowance. If my husband comes shopping with me – not so much LOL. For really effective control in keeping within your allowance you might need to put an unnecessary item back if you find you are slightly over your budget. In the UK we have hand-held scan as you go devices so it is easy to see exactly what your shop balance is with every addition to your shopping cart.

      I was quite shocked to read that your Norwegian stores no longer accept cash – that's quite a scary prospect on many levels. I'm a bit of a techno phobe so the thought of being so reliant of technology is a little scary. It certainly is a strange world we live in now Gill.

  2. karen says:

    a lovely system – I don't have envelopes but I withdrawal from every paycheck a certain amount of money for certain things and that is it. It usually works for me, but it's just the two of us now.

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