The One Thing You Need To Stay On Budget

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In a previous post, we talked about how to create a monthly budget and I also gave you a FREE calculator to help you!

To summarize, you need to:

1. Calculate your income
2. Calculate your bills
3. Estimate your variable budget
4. Find out how much you can save by using the calculator.

If you haven’t downloaded the free monthly budget calculator yet head over here.

In this article, we are going to talk about what to do after you calculate your budget.

When do you add money?

The first thing we need to talk about is when you will add money to your account. Are you going to use the money you get every week or bi-weekly or do you use the money for last month for this months budget?

From my personal experience, it is better to use money from the previous month and at the beginning of the month you pay all of your bills and take any cash out you may need.

With my husband, we each have a personal account and then a common account. During the month we both receive our paychecks on our personal account and don’t touch it. Then, we do our monthly budget and calculate how much we both need to transfer to the common account in order to take care of all of our bills and other variables.

This way we only have to make one transfer and we know exactly what we have for the month.

But we realized that by just doing this we were not good at staying in the budget for our variables like groceries and date nights.

The problem wasn’t that we didn’t budget enough money, we were just overspending without even looking at it …

We tried software like Quicken and the bank apps but it never worked because we would take the time to assign each expense to their category for a couple of weeks and then never look at it again.

So we had to change this.

Different ways to pay

After listening to the Dave Ramsey show we decided to give a try to the envelope system and I have to say that it literally changed our way of spending and we are finally sticking to our budget. And the best part: we don’t need to do anything!!

So now this is how we pay the different categories:

• Bills: we pay most of the bills on the app Prism at the beginning of the month or when they become available later in the month (it only takes 5 minutes to take care of all of them). We only have HOA and Waste Management that are not available on Prism, so we pay them directly online.
• Gas: For gas, we use our common account debit card. We have been budgeting for so long that we now know how much we need every month.
• Variables: For groceries, entertainment (date night and going out with friends), and personal expenses we use the envelope system.

The envelope system

If you are lazy like we are about tracking your money and want to get better with your finances this is for you!

The idea is simple, at the beginning of the month you take out the amount of cash you budgeted for each category.

For us it looks like this:

• Groceries: $400
• Date night: $300
• Personal: $160

Since we have a limit of $600 a week for cash on our credit cards we simply use both of our debit cards to take money out of the common account.

We could call and ask for the limit to be higher but we are lazy people 😀

Once you have the cash you simply have to put it in a different envelope for each category.

And when you are going somewhere take your envelope accordingly!

Voila!

Why does it work so well:

• You cannot spend more than you have
• You will be more careful with spending
• You can move the cash around the categories if needed but you won’t spend more than planned
• You don’t need to do manual work

The perfect wallet

The two first months doing the envelope system we used real envelopes. But they would quickly fall apart in my purse and I would find coins everywhere.

So I did some research to find the best way to get organized and found Bella Taylor Cash System Wallets on Amazon.

It was exactly what I was looking for, a nice looking wallet with several compartments to separate my bills for each category. It even comes with pre-made labels that you can slip in to know what the sections are for.

The wallet is available in many prints and you can find more pictures on this link.

Using the envelope system in vacations

A few months ago we visited friends in New York and we decided to use the envelope system to stay on budget.

How to use the envelope system when traveling:

1. Create a vacation budget for each day
   • Food
   • Transportation
   • Activities
   • Shopping
2. Take an envelope for each day of your vacation
3. Put the daily amount of cash in each envelope
4. At the end of the day, add the leftovers to the next envelope

So when we went to new york, we budgeted $100 a day for the both of us for two meals and activities. At the end of each day the leftovers were added up to the next day and at the end of the week, we had enough money to go shopping.

Save for later

Further reading

• How to Create a Monthly Budget + FREE Calculator
• 5 Apps you Need to Stop Stressing About Money
• Everything You Need To Know To Stop Stress
• The Best Audiobooks That Will Change Your Life
• The Best Tools To Improve Your Life And Be Happier

Over to you

How do you manage your money?