Tuesday, January 31, 2012

Cash Budget Envelope System

I'm sure most of you have heard of using the cash budget system. It's been made popular by Dave Ramsey but honestly, it's little more than common sense. When we have cash on hand, we're more reluctant to get rid of it...or at least I am. And that's the main idea behind the cash budget system. You don't use debit cards, credit cards or checks. You use strictly cash.
This method is great for a multitude of reasons: you're less willing to hand over a $20 bill for some $5 frivolous item than you are to slide a debit or credit card; you can visually see where your money is going and realize more quickly when you're about to go over-budget...in fact, you can't really go over-budget with this method; you keep better track of where you use your cash than you do where you use your debit card; and if you're anything like me, I detest using $1 bills (such a pain!) so they just pile up which can add up to big 'savings'.

The idea is to withdrawal your paychecks from your bank account (I'm assuming most of us have direct deposit nowadays) and divvy up your cash accordingly with your budget expenses. For example, my husband gets paid every other week. So we use two envelopes for groceries: week 1 and week 2 (I've seen people use 4 but it seemed pointless to have the two extra envelopes when we are only budgeting between paychecks); an envelope for family activities; and envelope for tithes and offerings; a 'spoil me' envelope; two envelopes for gas (my vehicle and my husband's); and an envelope for savings. We schedule most of our bills to automatically deduct from our checking account on payday or the day after payday. We calculate what is leftover from each paycheck (fairly easy to do because my husband is on salary so his paychecks are exactly the same every week). To make it easier to figure out, we take half of our monthly budget for each bill expense and pay it out of each paycheck. For example, our electric bill averages $182/month. No, I'm not that OCD about it, I asked the electric company and they told me. However, I am OCD about paying even amounts so we budgeted $200/month for electric. Every two weeks, we pay $100. This works out fairly well because our utility bills, excluding electric are roughly the same amount each month. With electric, we have less expensive months and more expensive months but because we pay the flat $200/month, it evens out.
So why am I telling you all of this? Certainly not because I want to be your budget accountant. As much as I love crunching numbers, I would rather not get too involved with YOUR finances. But, while browsing through pinterest last week, my sister found the idea to make your own cash budget envelopes from Kelleigh Ratzlaff Designs. You see, you don't have to use plain Jane boring envelopes. You can make your own (it's super simple) and budget in style. Kelleigh was nice enough to put them in her Etsy store for those that are interested, or she has a template on her website to make your own. Unfortunately for my sister, she is not as crafty as me (Sorry Alisha, it's true!) plus she is a paramedic and works crazy long shifts. While I was putting together my sister's envelopes I thought I'd take some pictures of the process in case someone else was interested in giving it a try.

Cash Budget Envelopes

This project was fairly easy to accomplish and budget friendly. I made one for my sister and one for me, each with 8 envelopes. You can pick and choose the categories that you want, just remember that this has to fit inside your wallet so you don't want too many. 

Step 1: Make your template. I just used an envelope and pulled it apart. Then I traced around it onto cardstock and cut it out. 

Step 2: Cut your paper. I took my template and used clips to secure to a stack of 4-5 sheets of scrapbooking paper. This allowed me to make minimal cuts. The clips kept everything in place so the paper didn't shift as I was cutting.

Step 3: "Laminate" Unfortunately I don't have a laminating machine at my disposal. Okay...actually I do, but it only laminates with thick plastic. And you want to be able to fold the envelopes. The solution: Contact paper! (It's nearly impossible to see the contact paper in the pictures...sorry!) Just peal and stick the paper onto the contact paper. Then cut out again.

Step 4: Fold. The great thing about contact paper...it's easy to fold. That was the only step I was worried about but it worked out great. And it made the envelopes very durable. Let's face it, if your envelopes are ripping and tearing and need to be replaced every 2 weeks, it's not very budget friendly.
I folded the two short tabs in and then used double sided tape to fold the bottom half up. Note: I put the tape on the bottom half. That's because the two tabs are going to be longer than the bottom half. You don't want to have the tape exposed and it was easier this way to prevent that.
Once I had all of the envelopes created, I grabbed some of my random alphabet scrapbooking stickers and labeled my envelopes.

Step 5: Bind. I used a hole punch and punched 5 holes across the bottom of each envelope. (I used a template and placed it on top of each envelope to make sure the holes were evenly spaced.) To bind, I just used zip ties. I also attached the template to my envelopes. This gives me something to tuck into my wallet.

Cost break down:
Scrapbook paper (price varies) I purchased a $5 pack of 50 from Walmart...double bonus, all of my envelopes correspond. Total cost per envelope: $0.10
Contact Paper: $5.24 for 24' x 18". You could laminate up to 64 envelopes if needed. But if your budget requires 64 envelopes, you might want to reconsider how you work your budget! Total cost per envelope $0.08.
Zip ties: $1 for a pack of 100. Total cost for the project $0.05.
And I just used leftover scrapbooking supplies to make my labels but you could just use a sharpie marker.

Total cost for an 8 envelope budget: roughly $1.50

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