Having an envelope system for regular expenses that you would normally pay cash for is a smart move. Sure, your friends will think you’re weird or make fun of you, but who cares? The goal is to have you in control of YOUR money.
I’m not going to go into details about the envelope system (we discuss it at length in the eBook, and if you haven’t picked up a copy yet, I’d suggest you doing so now), however here are some rules when using the system:
1. Be Patient. Starting your budget will show how much you really spend on certain items, and you’ll have to tweak it throughout the process. It may take a couple of months for you (and your spouse, if you’re married) to get it right. Don’t get frustrated if during the first month everything isn’t working out exactly how you planned it. It took my wife and I 4 months to get the budget accurate.
2. Know which envelope to rob. That’s right, when you’re doing the envelope system, you can borrow money from one to replenish the other: just make sure you’re keeping track of where you’re taking it from. Let’s say you order pizza on a Friday night. You’re given the choice: do I take this out of my grocery envelope or take it from my entertainment? It’s up to you.
3. Don’t cheat. Learn to live within your means before going to the ATM to make another withdrawal. For example, if you have $75 left in the envelope and you get paid in a week, see what you can do to stretch that money out for the week at the grocery store before dipping into the ATM again.
Remember, having an envelope system is weird, strange and you may even get made fun of because of it, but it’s there for one purpose: giving you control over YOUR money.