Envelope Budgeting Categories. Many of us struggle with managing our money, especially in this economy when there are too many bills wanting our attention. In less than 10 minutes, with just an envelope and a pen, you will learn how to organize your money into different categories and cut off any indulgence while still indulging yourself a bit. With that in mind, let’s get right into it!
What Envelope Budgeting Is All About
The envelope budgeting system is a type of budgeting where you have envelopes labeled for a specific expenditure/category, put money in the envelope, and close it. It’s as simple as that. How much money will be in an envelope will depend on what the money is meant for. Each envelope represents how much you will be spending on a particular item for that month. E.g: The groceries envelope will be for groceries shopping.
This method of budgeting is interesting and easy because it helps you define your cash usage. Instead of going around with cash and dispensing without prior planning, you can do premeditated shopping with precalculated spending. Once you have made out the list of your usual monthly expenses and have an envelope for each, all you will be doing each month is refilling the empty envelopes.
How To Use Envelope Budgeting And Stick With It
Now, you have labeled your envelopes, done your calculations, and distributed your money into each one. The next best thing is to take out the money from the tagged envelope whenever you are going on shopping.
Better still, you can take the whole envelope to where you will be purchasing the item if opening the envelope before leaving your house may tempt you into adding more money from your savings envelope.
Another tip is to use the money in the envelope only. If you had planned to pay $100 for eating out, and unfortunately, your meal is more expensive than that, it is best to stick to your $100 by either choosing another meal or going to a less expensive place.
Getting Started With Envelope Budgeting
As a beginner, it is advisable to not be too strict with yourself so that you will be able to stick to your budget. Additionally, it is best not to have too many categories as that may easily lead to frustrations and ultimately giving up. And believe me, you do not want to give up on how to control your spending. Some of the usual envelope budgeting categories will be discussed next.
Envelope Budgeting Categories
Consider some of the categories listed below. They can give you an idea of where to begin and how to organize your money moving forward.
1. Eating Out
This includes money spent on restaurants, cafés, drive-thrus, takeaways, ordering in, coffee, etc. You just have to think about all the possibilities of where you will be eating out. You can bring your “after-work drinks” in this category.
2. Healthcare
This is in case there is any need for medical care of any kind. Hopefully, you would not have to use it most of the time but it should be there. It is important to be ready for any simple cases of medical attention. You may be wondering what to do with the unused/remaining money. I will come to that, for now, let us continue with other categories.
3. Gas
With the continuous rise in gas prices, setting aside a substantial amount of money has become a necessity. You could even have extra cash set aside to shield yourself from any price increase.
4. Grocery Budget
Ranging from the food you cook at home, to the money that goes into grocery shopping, warehouse stores, and convenience stores should all be included when planning your grocery percentage.
5. Utilities
Your utility bill is one of the top priorities for every household and is likely to vary at different times of the year. Having an envelope for this will help you keep your bills in check. No surprises. Months end quickly and those bills are just waiting to come knocking.
6. Phone Bill
Another bill that deserves your utmost attention. You may also want to have extra side cash (a buffer), to neutralize any excess data consumption, calls, or texts.
7. Car
Setting aside an envelope for your car upkeep is vital. The amount you keep each month may not be something big, but being consistent will help you sort yourself out easily whenever there is a need for maintenance.
Plus, if you are still paying for your car, it is advisable to set aside a separate envelope for its payment each month. This would be a fixed price since the price is unlikely to change.
8. Housing Expenses
Your mortgage or rent are also fixed prices, which is why it would be a smart decision to set a fixed monthly cash for it. Mind you, having your own house does not exempt you from having a house expense envelope. Do not forget that your taxes and insurance are waiting for you.
9. Clothing, Shoes, and Bags
If you are like me that would not mind spending my money on the latest fashion out there (especially bags), then you need to watch out. Nevertheless, having a fashion envelope for yourself or the whole family will help reduce unnecessary spending tendencies.
10. Childcare
Taking care of your kids is not cheap at all. They have extensive expenditures. Most times, what you spend on your kids is more expensive than what you spend on yourself. Therefore, having an envelope for them is not a debate, it is a must.
11. Fun and Entertainment
Remember I said reducing your indulgence while still indulging yourself a bit? Yes! You should not forget to include an envelope for your enjoyment. The amount will depend on what you like to do. Movies, novels, concerts, karaoke with friends, anything!
12. Savings
Yes! Savings are very important. If having an envelope is the only feasible way to save, then so be it!
13. Others
Other categories you may wish to include in yours like pets, toiletries, miscellaneous, make-up and beauty, vacations, gifts, charity, etc.
What To Do If You Have Leftover Cash
No big deal! Less spending this month means more money available for next month.
Final Thought
Whether you struggle with managing your cash or not, envelope budgeting is an innovative way to keep your expenses in check. You have nothing to lose and a lot to gain/learn. A trial may convince you. Or not!
