Budgets are a living document. They aren’t something to create once and set it for life. Gas is on the rise and projected to be $1.50 by the end of summer, plan accordingly. August budgets can be larger if you have school supplies to prepare for, and with summer your kid activities may be lower than the school year. It takess a few months to get a budget going, and we still have things pop up, don’t let it turn you off of budgets.
Everyone has different categories in their budget. A great place to start is to go through your credit card bills and debit transactions and average out how much money you have spent in 3 months on each category. Don’t worry, it takes a few months to work out the kinks of a budget, don’t give up.
Write down every source of income you have, salary, child tax benefits, and Kijiji or online sales.
You may feel that it is restrictive to be on a budget. We actually felt that way when we started too. Very quickly though we felt like it gave us permission to spend money. When we started to get out of debt it was 10 years ago, and I was on a maternity leave and my husband was just starting his massage business and was self employed. We never would have spent money on ourselves, but the budget gave us permission to spend money on a movie rental. Yes, that’s how long we have been doing this when there was still a Blockbuster!
Before deciding how much money goes into each envelope look at the calendar and see what events are coming up for the month.
For us, June has our daughter’s birthday, Father’s Day, 2 teacher gifts, bus driver gift, and treats for dance, gymnastics, brownies and guides leaders as year end thank yous. We also have som extravehicular expenses that will be in our entertainment budget. Look at your calendar and try to foresee any upcoming events.
We have an envelope for the following categories:
1. Date Night
2. Kid Activities
3. Power Bill
4. Frenchies/Clothes
5. Car (gas, repairs, insurance and if you have a payment or save for new car)
6. Groceries
7. Lottery
8. Miscellaneous
9. Insurance (pay annually for a discount, but continue to save monthly)
10. Cell Phone
11. Internet
12. Toiletries
13. Mortgage
14. Entertainment ( vacations are included in this section)
15. Property Taxes (this needs to be paid 2x a year)
16. Gifts ( we buy gifts all year long and store in a tote)
17. RESP/RRSP/TFSA
At the start of each month we put cash in each envelope. That's the money for the category. When it's gone, it's gone. All the money that was left over and not put in envelopes we used to put on the mortgage as an extra payment. You can use the extra to pay down other debt, or as a float the first few months when working out your budget.
You can put your receipts in the envelope or jar if you want to. If you are using an envelope you can write on the envelopes the amount and date you spent the money.
At the end of the month there are a few things you can do if there is money left over. You can allow the money to carry over and build up in the category. For example, the Power Bill is due every other month, this one builds up.
We allow the car budget to build up also. We allow this to build up for new tires, and for a new car. We purchased a new to us 2015 a few months ago, and have a 2013. We are hoping to make it to 2023 before we get a new car, but we will be prepared.
Groceries envelope, at month’s end you may realize you have some extra money to do build your stock pile. A stock pile is the extra food you have in your home. Some months are better than others for coupons and sales for building on your stock pile.
Clothing, and Date Night envelopes we don't let build up.
For a challenge we have an empty envelope purposely for month end. The last day of the month we dump any left over money into it to be the fun money. This was how we afforded a get-away in a neighouring city for a night, or a movie dinner date.
After a while it became a challenge for us, and all money left over went on the mortgage. Sometimes we skipped a date night and had an at home date. Then the money that was left in the date envelope was slapped on the mortgage. Now we use it for our dream vacation fund.
If you are saving for something special, say a vacation or a new purse, have an envelope specially for that item. We used to keep our money in jars, but it got bulky and took up a lot of space. Jars are a good visual to be able to actually see the money, and how fast it is being spent.
We have a page in our Home Economy Binder with each category of our budget written down. We used to track what we thought we would spend, and the actual money spent in each category. It helped us to tweak out the budget.
If you are looking for an app try Dave Ramsey EveryDollar. It is free and user friendly. I am old fashion and like pen and paper.
You may remember Gail Vax Oxlade from the show Till Debt Do Us Part that aired on the Slice Network.
YOU WON'T BELIEVE THIS BUT TRY IT A MONTH AND YOU WILL SEE...Doing the envelope system makes us feel like we have more money. It gives permission for us to spend money while keeping an eye on the prize. When we first started we used jars, so we could physically see the money, this is an option and may work for you. We were stupid and went out and bought matching jars at the Dollarama lol. I have quite the collection of mason jars and sauce jars any of those would be fine. I also save all those pesky prepaid envelopes that come out in the mail, and use those as our budget envelopes.
Give yourself a few months to work out the kinks. Don’t beat yourself up about it, you are making progress!
It pays to be frugal.
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