As you know, I have a great little Etsy store where I peddle my handmade cash envelopes for your cash budgeting system. I create custom labels for my customers, and it is really fun to see all of the different budgeting categories people use. It is VERY common for a customer to purchase a set of envelopes and then wonder what they should have for their categories. Well, now, that’s an interesting blog topic, isn’t it?
Cash budgeting is catching on all over the country, but it can sometimes be uncomfortable to talk about money. I thought I’d demystify the topic a bit and let you know what WE do as a family of 4 living on one income.
First of all, let me explain our cash envelope system. I have a set of 10 envelopes that I keep with me in my wallet (in my purse) at all times. I know that makes some people uncomfortable, but it works for our family, and it prevents me from having to run home to grab the grocery envelope if I forgot my cash while at the grocery store. My husband also has a set of 5 envelopes that I made for him that he keeps with him most of the time.
These are the categories that I use:
• Groceries – Week 1
• Groceries – Week 2
• Groceries – Week 3
• Groceries – Week 4
Breaking up my groceries over 4 weeks keeps me from overspending at the beginning of the month and then not having enough money for milk at the end of the month. I put all food and household purchases in this category. So, all cleaning supplies, toiletries, food – including the occasional take-out pizza if there is money leftover at the end of the week. When you start using cash for groceries, you will figure out that you will spend WAY less at the grocery store, because you will reevaluate whether you NEED that second bag of chips. When I started my cash budget, we figured $100 per person for groceries ($400 for our family). By the end of the second month, I was able to cut our budget down big time. We spend $50 a week on groceries, for a total of $200 a month.
• Fun – This is my fun money. I get $50 and my husband has his own $50 that he keeps with him. I use it to buy myself a coffee treat, a meal out, new lipstick, a new shirt, school pictures, a gallon of paint, a trip to DQ, or new socks for my son. “Fun” is sometimes not so fun, but it keeps us on track and within our budget. Neither of us feel a sense of “entitlement” when it comes to our fun money. I would imagine that “blow” is probably a better descriptor, but I just couldn’t bring myself to put that on an envelope!
• Gas – I live in Oregon, where we have gas station attendants who won’t let us pump our own gas. Typically, they make you take your cash inside, however I have never had one insist that I get out of my car when my kids are with me. I just hand them the cash and they hand me my receipt. I have a Gas envelope ($150) and my husband has one for his vehicle ($150) that he keeps with him. I DO use cash for Gas, because it helps us to evaluate whether we REALLY need to go into town, or could we wait and group our trips later?
The way we do it is we don’t say, “Fill ‘er up!” Instead, we say, “$50 please!” which doesn’t fill ‘er up, but it keeps us on track with our budget so we don’t overspend at the beginning of the month. Also, there are months that my envelope is empty a week early because my vehicle is the family vehicle. Thankfully, those are usually the months when my husband’s gas envelope still has money left in it. We share as needed!
If using cash at the pump won’t work for you, then just try my “$50 please!” method to help you stay within your gas budget.
• Hair – I budget $40 a month for this, but it requires a little bit of wrangling. My husband’s haircuts cost a bit less than $20 every 6 weeks, and my haircuts (and brows!) cost $30 every 6 weeks. So, I give him $20 in his Hair envelope and I keep last month’s leftover $10, plus my $20. The first month, I didn’t get a haircut. By the second month, we were on track. (Confession: Sometimes I over-tip my stylist, because she rocks. I just steal from another envelope to compensate.) I color my own hair, and I am pretty low maintenance otherwise. I’m always jealous of the ladies who have me make an envelope for their pedicures! Hey, if it is important to you, you should budget for it, right?
•Date Night – YES, we have all heard that you should have a weekly or bi-weekly or monthly date night. I have to tell you that going out to dinner with JUST my hubby sounds so amazingly appealing that it makes me want to cry, but it doesn’t always work into our busy schedules. Instead, we budget $10 a month for something special for the family. Think of this as another “fun money” category. Usually, we will add it to leftover grocery money or Daddy’s fun money and go out to Thai or Chinese food as a family. Sometimes we get the 4 for $5 ice cream treats deal at DQ. Sometimes we will pick up some fancy cheese and crackers and a bottle of wine for a “couch time” date night. We are very grateful that we live near my husband’s parents and that they really, really like our kids. When we do head into Salem for a date night, we drop the boys off with them and then use a gift card that we received for Christmas for dinner out. Plus, I’ve been picking up a lot of local Groupons for fun little restaurants around town, and when I share my referral link and you sign up and purchase your first deal, I get a little credit, so these dates end up being free for me! ••• By the way, here’s a bit of a soapbox speech: You really, really, really do need to spend some quality, face to face alone time with your husband. My favorite is couch time after the kids go to bed. NO television, soft music and conversation. It doesn’t cost any money and is a great way to invest in your marriage!
•Gifts – My Gifts envelope is usually empty except at Christmas time or in the early summer when my boys have their birthdays. I’ll tell you about our savings account micro categories in a later post, but just for now: We budget $50 a month for Christmas, birthdays, showers, weddings, etc. Any type of gift is taken out of the gift budget category. When we get closer to Christmas, I’ll probably pull $100 out of savings for my Gifts envelope so I will have my money with me when I find my husband the perfect pair of pants. Or whatever.
I’ve been using Swagbucks as my search engine instead of Google, and I’ve shared my referral link on my blog and on Facebook. When you sign up with Swagbucks using my referral link, then every time you search on using the Swagbucks search engine, you have the opportunity to win Swagbucks. These add up pretty quickly (especially when you share your referral link), and pretty soon you can cash them in for a $5 Amazon gift card. Last year, I bought most of our Christmas presents on Amazon using $475 worth of gift cards I had earned through Swagbucks. WOW! You can read all about that in this end of the year Swagbucks post!
Yes, we DO usually have money leftover in the gifts category at the end of the year, so we roll it into savings. Again, I’ll tell you about that in a later post.
•Blank – This is my last of 10 envelope categories. I usually put my +UPs in there, or if I received some money from my birthday, I’ll put it in there. I like having a “misc” category, just in case I find that I need to add something to my budget temporarily.
And, that’s how we use our cash envelopes. However, the cash envelopes are really just one (major) part of a larger budgeting system that we have in place. I’ll share about our savings account and our little micro categories in a later post!
In the meantime, let me encourage you to budget for what is important to you. I have seen a LOT of categories, and I really love seeing how other people budget. Some categories that I really like:
Starbucks – My sweet friend Susan has a major Starbucks habit, and she BUDGETS for it. I love that.
Leftover – My friend Angie has an envelope for any money that is leftover at the end of the month. Oh, the discipline!!! She then puts it into savings!
Crafts – NO guilt when you buy that new bottle of adhesive or tube of glitter. After all, it’s in the budget!
Entertaining – YES, you can entertain on a budget! Imagine having an envelope strictly for entertaining others in your home or taking someone out for coffee! You’d see a lot more of your friends, for sure!
Decorating – I am SO jealous. No, envious. 😉
What about you?
What other cash envelope categories do you use?