Back to Budget: The Envelope Savings Method - How Do You Save?


I love taking being a cheap bastard to the next level by setting a budget and sticking to it- or going the extra step by going under my budget. I started doing the envelope budget method at the start of the year but fell off it when my envelopes ripped apart from frequent use. Bad excuse, but I want to get back in the habit this December and into the new year!

Here's what I'm thinking of for December:

Groceries: $150 
Car's Gas: $40 
Thrifting:  $30
Fun Stuff: $25

I know that's super low for December, but a lot of my gifts have already been purchased- and  a lot my gifts are going to be prepared food items. (I'll share recipes later!) Want to play along and get back on track with savings? Here're the rules...


Envelope Budgeting Saving Method Rules:

1. Never over the amount in the envelope.
2. Never switch cash from one envelope to the other.Once money is out, it's out!
3. Make it a game, try to carry over as much cash as possible to the next month! 


I'll follow-up with how I did at the end of next month. It should keep me accountable and maybe inspire you to get reckless spending under control. I love using this method to save because it makes your spending tangible and forces you to get creative to keep on track. You look for free events, carpool, pack lunch instead of buy it, and hit the thrifts for essentials to save.

What Methods Do You Use to Save? Planning any financial new years goals already?
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22 comments:

  1. I need to try this challenge. Thanks for the idea!

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  2. You definitely have to share some recipes as your groceries budget is waaaay below what I could ever wish to accomplish (even if I cut out the other 3 people in my house, lol). And I assume that fun stuff includes eating out? Please share your super-frugal ways in the kitchen with us :-)

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    1. I did mean to include that I'm merely feeding myself and a cat, which helps the bill low! I'd say eating out is in my grocery budget rather than fun budget. I'm definitely going to follow-up with a super-frugal kitchen post. I'm doing some tricky (sometimes shameless)things people may not have thought to do...

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  3. I love this idea! Knowing myself, though, I would cheat so bad (My fiance: "Sooooo, you went to the grocery store, and bought sixty packages of ramen noodles." Me, brightly: "Yeah! So now I can take whatever's leftover from the grocery envelope and put it in the thrifting envelope, right?" even though this is specifically verboten). I think 90% of people's budgetary problems (mine included) are that they don't think about how much money is actually going out and for what...this would really help reign in spending by making the spender accountable. Excited to see what your results are!

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    1. I set a $25 budget for thrifting this first time I tried this, I made it but it was KILLING me. It DID teach me to embrace the low prices at the flea markets rather than going to thrift stores. This kind of experiment makes you get creative and find new ways to save. The money really does go VERY easily when we don't hold ourselves accountable and budget well.

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  4. Van,
    I think this is a great way to budget. I'm sure you don't use credit cards, but perhaps you should put it in the rules! So many people i know run into problems because they do not equate using a credit card with spending actual money.

    I too am one cheap bastard that loves to take it to level (I adore the first line of your post, grabbed my attention instantly!!)I am excited to discover what you do in the kitchen that even the cheapest of cheap bastards may not have tried.

    Thanks too for your comment. I've been following your musings for quite some time now, so it was a 'celebrity' comment for me :)

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    1. I still use my first "Starter" credit card that I got to establish credit. I set my bills like electric, phone, and insurance to "autopay" and they are paid automatically with the credit card. Then on the first of the month the bill is auto-payed with my savings account. This keeps me using the card and establishing credit while not "mindlessly" using it. No problem on the comment, I love reading the blog of a fellow thrifty bastard!

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  5. i used to do this method and it worked so well! i need to get back too it. it is HARD to stop going out to eat so much when we can just swipe that debit card! it doesn't feel like we're spending it.

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    1. Eating out is my weakness too. I'm always hunting for yummy vegan places to eat and it adds up ! Envelope budgeting helps keep that spending in check.

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  6. Question - does your thrifting budget include items for resale or only those you are keeping for yourself?

    I keep the same food budget each month. No envelopes, just a small book that I write down every food purchase in. If I go over the next month is that amount less - therefore I always try and stay someone on track and can still stockup when I find a good deal.

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  7. The thrifting budget includes personal items and items for resell. The month's budget above doesn't reflect my normal budget, it's more like a challenge budget. I already have TONS of merchandise to price, photograph, list online, and tote around, so setting a small budget for thrifting this month shouldn't be too hard...as long as I don't go into too many thrift stores.

    Love your food budgeting technique. I need to get back on track and keep budget books, physical and online, for every single purchase. That was a resolution I fell off on.

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  8. That's how Gail Vaz-Oxlade directs her guests on her show, Til Debt Do Us Part, to organize their money in their month long challenge, only she uses jars.

    We make a fair amount of money in our household, my BF & me... although, where does it all go? We barely do anything. Our friends describe us as an old lesbian couple. I guess it's because we eat out A LOT. Once we spent $130 in less than 24 hours.

    We need to budget.
    It'll probably never happen.

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  9. Eating out is so expensive, but so delightful! I'll talk more about it in later posts, but I recently started a part-time 2 day a week gig working in my favorite raw vegan kitchen. I'm learning to make my favorite foods, I get a big discount on my favorite foods, I get to save scraps to juice or make into other meals at home, and we're allowed to order groceries at wholesale discount. Not bad, definitely was worth "harassing" them for a job ;) And I'm learning to cook faster/better.

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  10. I use the envelope method as well and I LOVE it. I end up feeling like I have more money to spend than ever before. This is such a great budgeting tool. Oh, and I LOVE your envelopes-did you make them yourself?

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    1. I got the envelopes from a 100 yen store while visiting Japan. I'll have to try my hand at making my own ones next!

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  11. My mom, who is 90, has NEVER paid interest on a credit card. She has used envelopes to budget. I was better in my youth, but I am less disciplined then she is. I adore immediate gratification, unfortunately.

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    1. I'm sure my grandmother has never even owned a credit card or paid interest either. I've set my card to be automatically paid in full at the start of each month so I never pay interest.

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  12. We started the envelope method this past year and it has it's pros and cons. We find we are juggling it constantly, but it's much easier to save for things like car insurance, that only come up every six months. Some envelops we can not take from, like the insurance or house taxes, but can juggle envelopes like the clothing and entertainment money. The thing is, out of sight, out of mind and impulse purchases have gone way down since we don't carry the money with us.

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    1. I'm eager to get back on it and see how it works. December will be a tough month to start it out, but it's time to save. Glad it works well for you!

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  13. Wow, this is such a great system, but I don't think I could live on this amount of money. It costs $60 to fill my gas tank alone, and I need to fill about twice a month! And I probably spend at least $200 per month on food, though I could probably narrow it down to $150 if I cut corners. Also, I know this sounds weird, but carrying too much cash makes me nervous. I'm always worried I'll get robbed or something. I live in LA, so this is valid haha. Maybe I need to get a locked drawer if I do the envelope thing.

    In conclusion, I am really impressed/jealous of your abilities!!

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    1. I wouldn't have been able to accomplish this when I had a full-time day job as a marketer, I was putting $40 in my car per week at least. I don't like carrying too much cash either, not just for fear of robbery but fear of losing it. I'm pretty damn clumsy that way!

      I love a challenge, the numbers don't reflect my normal monthly spending but I'm looking forward to sticking to those numbers in December and saving.

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