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October 28th, 2006, 09:06 PM
Join Date: Oct 2005
Location: Central California
I use the envelope budgeting method.
I break my household expenses into several different categories and take the money out in cash. I put the allotted amount for each expense into it's labeled envelope and once that money is gone, it's gone and I can't spend anymore in that category until the next month. I find that I spend less when I use cash too. I just don't get the same sense of how much I'm spending or how much money I have left if I'm writing a check or plopping a credit/debit card down to pay for something. With cash, you always know how much you have left until your next paycheck-no calling the bank or getting online and wondering if your dh has maybe spent money he wasn't supposed to.
I use the following envelopes:
~Gas (for the car)
~Spending "play" money.
For fixed bills (mortgage, utilities, car insurance, etc), I mail in a check just like everyone does. The envelopes keep me from overspending on the variable expenses.
STOCKING UP ON SALE PRODUCTS
I only buy cleaning supplies, hygiene products, & diapers/wipes when they are on sale. That means that I may go several months without buying any of those products, but I still put the money in the envelope each month and let it build up. That way, when (for example) diapers go on sale, I can take all the money in the envelope that has been building up for a few months and stock up. Since I've saved a little each month, it doesn't affect that particular month's budget. I hope I phrased that in a way that makes sense.
SPENDING "FUN" MONEY
Dh and I also budget a certain amount of spending or "fun" money each month that we can spend without being held accountable for. For us, that's $20 a week for each of us. Some ppl do $100 a week and I have 1 friend who gets $10 a MONTH. Regardless of how much or how little, it is something that needs to be decided ahead of time and taken out in cash. You can use it for whatever you want. Personally, I have a Netflix subscription (since we don't have cable tv), I buy a Subway sandwich once a week for $5, and the rest usually gets spent on stuff like Bath and Body Works or books from Goodwill, stuff like that. Dh normally blows his on fast food and video games and I can't say a word about it
Something that took me waaaay too long to learn is that you cannot budget every cent. You must set aside money each month for those unexpected expenses that come up every month. Things like oil changes, a call out to pest control, an unexpected birthday party invite, etc. If you don't plan for the unexpected, your entire budget will be thrown off and you'll resort to using a credit card or tapping into your emergency fund-neither of which should be touched for anything other than a true emergency. Not only that, but you will get discouraged and think that you just cannot stick to a budget and may even give up on budgeting altogether.
This brings me to another point-an emergency fund. Many ppl don't have any money in savings and when they hear ppl talk about an "emergency fund" they picture the 3-6 mos salary that we all know we're supposed to have sitting in the bank somewhere. HA! I don't know ANYONE IRL who has that kind of money in a liquid savings account. It's intimidating to think that you need that much money in an E.F. and we (the average middle-class working family) throw our hands in the air and say "that'll never happen so I'm not even going to try. I'll just keep an 'emergency' credit card instead." DON'T make this mistake. It's okay to have an E.F. with $1000 or $2000 in it. You need
for emergencies and you don't want to go in debt over a broken refrigerator or ER visit. The big thing to remember here is that a true emergency is something that affects your home, transportation, or health. Discuss the expense with your spouse & pray about it (if you believe in that). If you agree, only then withdraw the money for the emergency. Replace that money before paying off other debt or spending money on anything that isn't a necessity. Once your acct is back up to $1000 (or whatever amount you have decided to keep for emergencies), then you can continue to pay off debt or use for spending money.
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