Does the envelope method work for budgeting?

I am retired and only get paid once a month. I have to really budget my money for the month after paying the monthly bills. I was doing pretty good until the people that were renting from us moved out and we have not gotten any body to replace them. Now I have to pay for the whole household including the monthly bills whereas before it was split between three of us. At the beginning of the month I pay each of the monthly bills and then try to keep spending down to a minimum so that it will last all month. I get paid on Tuesday (the end of the month) and I have less than $2.00 left until then. I cannot get a job or the city (that I retired from ) will take a dollar away from me for each dollar that I make and I will have to pay taxes on it too. I try to put together some native American craft and sell then under the table at pow wows and in consignment shops. So far it has not been paying off but I keep hoping.

When I was working, we used the envelope method somewhat. I worked in a barber shop, so I brought home about $40-50 in tips most days that I worked. We didn't need that money to pay bills, so we would divide it up for certain things. While I was pregnant, we saved 50% of it for baby items. We each took 10% to spend on whatever we wanted, and then we saved 10% for Christmas/birthday/etc gifts. The other 20% went to savings. We did the same thing with my checks to a certain degree. We put the first $1000 every month in the bank, and then got anything else out in cash and divided it up the same way, except that we saved it for different things. We still put 20% in savings, but the other 80% was done differently. If there was something that we were saving for, like a new couch or bed etc, we saved for that. We saved 20% for stuff like that, even if we didn't have anything definite in mind at the time. We used the other 60% to pay extra on our bills. It worked pretty well for us. The saving for gifts was especially nice, so we didn't have to try to budget it in later. Now that we only have one income, we don't do the envelope method anymore. We just have our bills divided up evenly so that we pay half of them with the paycheck that my husband gets on the first of the month, and the other half with his check from the fifteenth. We pay them on the day he gets paid, so that we know we make every payment every month. Then we only have what's left to spend and it works out pretty well for us. My husband gets a little bit of cash out when he gets paid, and that's all he is allowed to spend without consulting me first. It's much easier to keep track of everything that way.

My old roommate used the envelop method and I used it when I was serving/bartending. It especially comes in handy when you are paid in cash in a job like serving. What I would do would be to make an envelope for all of my bills. When I would come home every night I would divide out my money that I made into each envelope. By the end of the month I had more then enough money to pay for all of my bills and the rest of the money I could use as either play money or save it.

hi. i've been on the envelope system for about a year now. as in i literally put money on envelopes but so far i haven't been successful at all. if you really don't have much it still won't work. in my case, i've had to constantly divert money because i keep on getting short in other areas. i think the best way for me is to simply just put your money in the bank, list what you have to buy for the entire month and stick to that list. try to scrimp as much as possible. everything extra should be saved. resist the urge to spend

I tried envelopes for different things. I put what they were for on them and tried to put money in them each week. Didn't work for me. I always got it out and spent it on other things. The only way we have been able to save money is to open a checking account and use it only for saving money. We put money in it, but don't take it out. We have another checking account we use to pay the bills.

My family uses the envelope system. It works wonderfully. You choose more wisely when you are about to buy something, because once the money is gone out of that envelope, you're done. If you stick with it, it can work. Many weeks we end up with a little extra money, and we just apply that towards a debt we are paying off. Let us know what you decide and how it works for you.

Yes, we literally have our money in envelopes with labels like: Food. Gas. Spending. It wasn't expensive to set up. I just found some envelopes and put them in a drawer. Each month, I divy up the cash into the envelopes based on our budget. Then as we use the money, we can't put more money into the envelope, so it has to last. If there is leftover money, it goes into extra debt payments.

i am using the envelope system. i litterally put all our money in different envelopes and i usually carry it on my person or hide it. it works like a charm for us. my hubby never learned how to manage money. i gave to watch over it or hell spend it all.

Reading this info makes good sense. I will have to give this method a try. I went from working full time to part time and am trying a side business selling Home and Garden Party, but we seem to still be struggling. The biggest thing is that my husband eats lunch out everyday, and that takes a chunk of change even at McDonalds. I will have to try this, I think that I could make it work! Thanks for bringing this discussion up. Good luck to you!

Wow, thanks for the idea. I want to save money and the envelope seems to be a good idea. I used to do something similar to this. I will definitely give it a try. Thanks

I am not sure about the envelope system. My husband and I are self employed and for years we lived with a 'feast and famine' system that was very stressful at times. 90% of the time we lived beyond our means and then had to juggle our finances to bring things back into some semblance of order. Finally after 17 years of living on the financial edge his health was affected and he had to go on a disability. Oddly enough it has been one of the best things that could have happened to us. We were forced to evaluate what and who mattered and decide to live within our means for the first time...and it is an amagingly freely thing. I began my system this way...when his disability check comes in...or I make income from my writing I take 10% of whatever it is and put it in the bamk in a savings account that is not accessible through interact. It shows up on line but in order to take money out I have to wander into the bank and physically take it out. That gives me reason to pause...and I usually don't. The second part of our savings program comes with the question..."Is this purchase an impulse WANT?" Or is this purchase a true NEED? More often than not we have to admit that it is more than a want than a need and if we have to dip into our savings we usually decide against it. I also purchased a book that has ledger columns in it and at the top I put headings such as Income, Outgo, Balance...then I break down purchases and catagorize them under things like mortgage, insurance, groceries, household, pet care, health and beauty...or whatever fits for your household. It can be a bit tedious at first...but now I really take a lot of satisfaction in it. After a few months I had a clarity about what we were actually spending on what and it was a real eye opener. We were able to shave $50.00 a month by cutting our resturant eat-outs. We still go out...just not as often and I put that into savings and there is a thrill in watching the balance grow. I also began collecting change and putting that into the savings. It may be only $10.00 here and there...but it doesn't take long to get to the first hundred. After that the motivation to increase the savings balance is there. At least this system is working for us. Good luck with whatever you decide to do.

I like the sound of this method, i believe it would work very well. I would like to see the bank that first incorporates the envelope method into their account system where people can make their own folders to equally divide the money into. What a great idea! I would definately use it.

It will be of great help if you record all your expenses, in so doing you will be able to categorize and analyze then your budget will be based on actual and since it is based on actual it will also be very realistic. You will also know which expenses you need to curve. Lastly, if you find that there is more room for your budget then you can plan for your savings.