A New Budgeting Idea

In order to work on getting out of debt, I’m really making an effort to get back to budgeting and the envelope system. To that end, as I started to plan my March budget, I put $500 into different categories that I haven’t been funding. By not funding envelopes, I am setting myself up for failure. Just because I don’t put money into those envelopes, doesn’t mean I don’t spend in that category.

Whether or not we put money in our “toiletries” envelope, we have purchases in that category that need to be made, things like toilet paper, dish detergent, dish soap, shampoo, soap, hairspray, etc. In an effort to not fall further in debt, I’m trying to fund all our envelopes as necessary. Unfortunately, this plan may keep us in debt a little while longer, but it will keep us from falling further into debt, if that makes any sense to you, reader.

For the month of March, we have earmarked $500 into envelopes. We are putting money towards: toiletries, hair care, clothes, school, and kids’ activities. We are also putting $200 for the month into savings and $200 into our car repair/tires envelope. In all, that adds up to $900 in March not going towards debt, but it also leads to less money being put on our credit card.

There are always “unexpected” expenses that come up and I’m trying to be more prepared for these expenses. The competition dance season will be in full swing come March, as well baseball and there are always little expenses associated with the kids’ activities that need to be paid.  I recently started reading a new-to-me blog that has given me a great idea about how I handle our expenses. It’s called shaking the money tree and she has been blogging since 2008. I’m currently working my way through the archives and love what she does with “left over money” from her envelopes at the end of each month. She takes the left over money and puts it in another envelope labeled the same way to use on those months when expenses just seem to be higher.  She continued putting the left over money in the envelope until each of them reached whatever threshold she believed made a good amount for that category.

I really like that idea. Sometimes, $100 is more than enough money for toiletries in a month and sometimes, we spend nearly twice that because we run out of everything at the same time. I think I am going to follow her example. I will create envelopes for my envelopes (I know that sounds silly, but hear me out) and put left over money in the new envelopes, to a certain point, to help pay for the months where what I budgeted is just not enough. That will also keep me from carrying around too much cash, which is always a worry. If I ever spend everything in the first envelope, I can always pay the remainder using my credit card and then run to the bank with the left over envelope and transfer the money from there. I know it sounds complicated, but I think it might work for me.

We won’t put gobs of money in the new envelopes. I will only put an extra $100 - $200 in each envelope depending on the category. The hair care extra envelope will top off at $100. The clothes extra envelope will go up to $300 and so on. Each category will be different and all the envelopes will be labeled. This has the added bonus of giving us a little extra cash around the house. I always worry that we don’t have enough ready cash so this will get rid of that worry too!

I’m already excited about next month’s budget and I can’t wait to transfer money from envelope to envelope!