Let’s start this one out by agreeing that money is stupid. It’s the number one cause for fights in a marriage and also one of the biggest challenges that the old men in Washington face. According to the University of California over 43 million Americans (13%) live below the poverty line. PRB then reports that 32% of Americans live in a low-income family. These percentages were given between 2011 and 2015, however, I would not be surprised if these percentages were the same or higher in 2017.
So, how do we fix this. What do we do to begin helping ourselves and families when it comes to managing our money?
Well I cannot tell you what to do, also I am by no means a financial advisor, but here’s what I’m doing.
Awhile back I took a family budgeting course that focused on Dave Ramsey, and let me tell you, that man knows what he’s doing.
One of his concepts involved an Envelope System. This is an all cash budgeting system where you separate your physical money into envelopes labeled with bills and other expenses.
Now, getting rid of credit cards and debit cards is practically impossible, especially when most bills are paid online. However, you can still use this budget system.
What I decided to do was first, take my credit card out of my wallet. Then I went out to buy a box of multi colored envelopes and separate them into categories: Orange is bills, Green is expenses, Yellow is savings and receipts, Pink is extra (fast food, date night, etc), and Blue is vacation. As a side note you will also need an Envelope for church, our church provides envelopes so we replace that one each Sunday and it sits on the corner of our envelope board.
Once I separated my envelopes I then labeled them. This resulted in 8 bills, 3 expenses, 1 saving, 1 receipt, 1 extra, 1 vacation, and 1 church.
As I said earlier, some bills are paid online, I still made an Envelope for them and wrote “online” under the label, that way we still had a physical representation to remind us to put money in our bank account.
The hardest part about the envelope system is knowing how much money to put where. This will 100% depend on you, your bills, and your income. However, what works for my family is this:
At the begining of the month I open my calender, open my notes and figure out what bills are due when, then estimate how much they should cost based on previous months. At the end of the month I compare my estimates with my total and adjust the next month after. My notes look something like this
After the monthly budget is intially set, we take each paycheck we receive that month and cash them. (The only deposits we make are to cover our credit cards and my student loan). We then take the cash home, put our church offering to the side, look at our notes and put enough money into each envelope that the bills in between paychecks are covered. After those bills are accounted for, we then put a small percentage into future bills, expenses, and savings. Whatever is left we use as extra. (As a side note I am a firm believer in having spending money. Budgeting should not make you feel like you cannot have fun or buy something extra! If after your immediate bills are paid, and you will have the money for upcoming bills and expenses then order that pizza! You deserve it!) After double checking all our envelopes and notes the physical management is done!
However, if you’re like me, cash is scary. I want to know where exactly it’s going, how much is being spent, and if we can better use that money in the future. This is why, I keep track of all income (paychecks, tips, refunds, etc) and expenses (gas, food, grocery, etc).
By doing this we become accountable for every dollar spent.
With this system of budgeting you will also come in contact with A LOT of change. Save it! Put it in a plastic zip lock, a jar, or something. Just save it. There have been times where we used change to go on a weekend trip. We’ve also had too much month and not enough money, so we used change to buy groceries. Either way change adds up. Save it.
To recap, leave the credit card at home, use cash and envelopes, be organized, be accountable, and always give to God first. This is only our third month using this system and it is working. We stopped over drawing our accounts, we have been able to pay bills that before were coverd by family, and we are improving.
In closing, I’m sorry this was so long, but I hope it helps! ❤
God first, important bills second, and everything falls into place.