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Tuesday, September 16, 2014

the envelope system {a template!}

Anybody out there a Dave Ramsey fan? Money guru, Financial Peace author, talk radio jockey. Am I ringing any bells?

I see you there. You're nodding.

 Well, if you've heard of Dave, you may also have heard of the envelope system that he promotes as a way for people to organize their money. 

Are you still nodding? Are you cringing instead? I see you there again. And I'm with you. On both accounts. 

The envelope system. For quite a while, it just "wasn't for me."
 I have a toddler. 
I'm always in a hurry. 
I don't like to carry cash. 
I'm already on an organized budget.
The list could go on an on.

But ultimately, our family has gone through a slew of financial changes in the last few years. 
New baby.
Career/income turned stay at home mom
New baby has a ton of unplanned medical expenses

At some point, we decided it was time to try something new. The envelope system was where we settled. And despite my preconceived notions, I'm actually really happy with it!

So the gist of it...  
The goal is to use cash money as much as possible in lieu of your bank card. Obviously you'll be using a check or online bill pay for major expenses like mortgage, insurance, etc, but after that the concept is simple. Withdraw the remaining money to use as cash. Create envelopes for your common spending categories {i.e. groceries, gas, eating out, clothes, gifts, etc}. Divide your cash money into those envelopes based on how much you need to use. This is a great time to look back at your previous monthly expenses and see just how much you were spending in each area. {Maybe you'll notice that you should cut back a little in a specific spot.}

The idea is that you are budgeted in each category. When your "eating out" money is gone, you're done eating out until the next pay period. No stealing from another envelope - you'll have to have a night in and scavenge the cupboards.

So why the envelope system? How is it successful? Well, psychologists have proven time and time again that you are more reluctant to spend cash money versus swiping a debit card. To physically feel the money leaving your possession triggers something in your brain, and you think twice about what you're spending. Having thought twice about your purchases, you'll find yourself being more responsible with your money, and ultimately, spending less. 
Not to mention that you are specifically budgeting yourself beforehand, so you're never spending more than you should. You'll always be ahead of the curve instead of behind the eight ball. 

 J.B. and I work hard for what we have, and we want to makes sure we're managing our dollars with as much responsibility as possible. By having an envelope system, we know exactly where each dollar  goes. We're thinking ahead to how much spending is appropriate for each area, not coming after the fact and thinking, "Oops! Way too much gone there!"

Interested in a more comprehensive explanation of how the system words? Check out this fantastic post from Happily Ever Strader for a full on tutorial of how they make the system work. This girlfriend really gets into every last detail.

So enough money talk, I'm moving on to the pretty stuff. 
I've always found that you can make even the most mundane thing much more exciting if you make it pretty. In regards to the envelope system, I wanted some pretty envelopes. DIY, of course. 

For now, I'm enjoying my envelopes with this little water color pennant label. Another big concern I had was that I wanted an envelope to be able to fit into my slim wallet. So these designs are just barely bigger than the dollar bill itself!

Click  { H E R E } to download these templates for free! I've left the font labelings off since we all have different categories. You can add yours either on the computer or by hand!

So what about you guys? Any other envelope folks already out there?
Anyone interested in trying it out?

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