This series of posts will help you learn how One Fabulous Mama rocks one fabulous budget for her family of five. In part one of this series, I describe how I use coupons and sales ad match ups to help keep my family under budget and living a fabulous life. In part two, I explore how I use gardening to supplement my family's meals all year long. In part three, I explain how frugal living and "deal" blogs inspire me (like I hope this one inspires you!), how to find them, how to tell the difference between crap and good advice, and I top it all off with a list of my favorites. In part four, I describe how thrifting saves me a ton of money and makes me feel like a smart, fabulous chick, too.
In part five, I explain how we use cash envelopes to stay on track and under budget every month. Peace, B.
A little too much information
"I want my website readers to understand who my family is. We are a debt laden, paycheck to paycheck living family of five who have decided money isn’t everything. I am dedicated to staying at home, acting as the hub of our family. Maybe, just maybe, I’ll write a story or two while I’m growing my garden and my children. The information on my website is how I can lead the braless, shoeless, middle-class lifestyle to which I have grown accustomed. I want you to understand I’m not driving some fancy car or living in some fancy house. I’m just a middle-class mom who doesn’t give a flip what anyone thinks as long as she can be with her family. The most important thing for all of us is being together. The best way we can manage that is for me to be One Fabulous Mama."
If you want to read the whole column, you can do so here.
What are cash envelopes?
Cash envelopes work for my family because they are easy to set up and use; we deal in cash only, not credit; they prevent overspending; and we're able to track our spending easily. There are so many great applications for establishing and tracking a budget. Those fancy apps make the cash envelope system seem pretty outdated, but it's amazing to have a tactile, real system of what you have left to spend each month.
For example, let's say you budget $100 a month for clothing. You put $100 in an envelope marked clothing and you can spend what's in the envelope and no more. During the month, if you need to know how much you have to spend on clothes, you look in your clothing envelope. At the end of the month, if you have money, you tuck that into savings.
*If you have trouble keeping up with how much money you have in the bank for different things, cash envelopes will help.
*If you find that you can talk yourself into purchases without really being sure you can cover them, cash envelopes will help.
*If you end the month overdrawn in your checking account (and this was a BIG problem for me), cash envelopes will help.
Wait! Some categories don't get envelopes...
What a month looks like for my family
We get paid once a month, so our budget is pretty simple. We don't have to tuck away money each week (or bi-weekly) because it all comes from one pot with the exception of any money I make on the side (which sounds so salacious that I hate to admit it comes from writing and not anything else). If you are paid more frequently, you'll have to decide how much gets pulled from each paycheck for each category.
Every month, I pay our bills (rent, utilities, insurance, etc) and then, divide up my budget into the following envelopes:
I do not include date nights and charity in the $350 monthly budget. Although these categories are very important, we can get by without them when our finances don't allow for us to spend money on either. That is, we can date for zero dollars and give of our time and talents when money is short. I also don't include gas because the amount we need fluctuates each month. Obviously, we can't go without gas... see what I did there?
Some months, I don't have enough money to fund a category at all. Such a first world problem to have to decide which to forego for the month- dining out or books? Using a cash envelope system helps my family understand what's available for which categories and what we are able to afford. Some months we require more money in one category and less in another. Cash envelopes help us stay on track and not overspend.
Cash envelopes are mighty helpful.
My favorite cash envelope story involves my middle-Little begging for a cold drink. Of course, I told her that if she was getting a cold drink, everyone was. At five times a buck fiddy, she was suggesting a serious investment into something I think is frivolous and wasteful, but I digress. I pulled out our cash envelopes and asked her which category we should raid for cold drinks. Should we take ten dollars from experiences since we were traveling home from a day in the city? Should it come from groceries since this was something we were consuming? Should I take it from dining out since we were indeed out (even if it was the QT parking lot)? All five of us saw that this kind of frivolous spending was going to make us cutback on other things we enjoy. Ten dollars is enough to purchase a new book, for heaven's sake. It's enough to buy several used books!
Now, some of y'all may be thinking that you can't believe I make such a big deal out of stopping for cold drinks, but that's you judging the choices my family makes. My family agreed that we would refill our water bottles and finish off the tea and that would be refreshing enough to make it the hour until we got home where cold sodas awaited without a ten dollar expense. Cash envelopes helped me illustrate to my middle-Little that everything we buy comes from some pot of money and those pots are finite. They also helped me show my Littles how being frugal means being thoughtful and patient.
The very best and unexpected result of using cash envelopes is the understanding my Littles have gained of personal finances, something my husband and I never learned as children. Even my little-Little who is 7 can get the concept that once the money is gone, it's gone and that's it until payday.
A word to the wise
A parting thought about how to set budgets for each category...
For example, if you spend $100 a month on dining out now, try to budget $80 and see how that goes.