Budgeting with the Envelope System

by Susan Michlin
(Moorpark, CA USA)

My husband and I decided we were going to only use cash. We made a budget and once a month I get the cash for the month. I divide it up into envelopes for each category we have, like food, food out, entertainment, cosmetics, dry cleaning, home repairs, crafts and home items, pet food and vet, postage, gifts, donations, clothing.
If the money runs out in that envelope for that month there is no more for that category so you have to budget how many times you can eat out or go to Starbucks. some categories I don't use but have to save up to say go to the dry cleaners or buy a new piece of clothing. Gifts is interesting because I have to save for Hanukkah through out the year. Seeing the cash really has more reality than using a credit card as to what you are spending. We do not use this system for utilities or rent or gas.