The envelope system we mention so frequently is a no debit/credit card system (and another little tip we learned from Mr. Ramsey) that helps keep spending under control for miscellaneous things you buy or do throughout the week. We both keep a “spending” envelope and a “grocery” envelope. Spending money is money you use when you go to a restaurant, get coffee, buy make-up or hair products, go shopping, etc. This is anything that’s NOT in your budget. When you get paid, go to the ATM and take out your pre-determined amount of spending money that is defined in your budget. You have that amount of money to spend until the next time you get paid. Same goes for groceries. If you run out of spending money and use your debit card, you are NOT sticking to a budget. If you are trying to save money or pay off debt, using your debit card in addition to your spending money envelope will deter you from achieving your financial goals.
If you would like your friends to continue acknowledge your friendship while you are together in public, do not take the word “envelope” literally. Please (PLEASE!) feel free to substitute the words “clutch, “change purse,” “pouch,” or “wallet” for envelope. We want you to remain so popular among your friends that you have difficulty rationing your cash allotment for the week, and we all know that using a plain white envelope to carry cash is not going to get you there. Being responsible does not have to mean that you are as boring as the proverbial plain, white envelope.
My budget says that I get $75 per week ($150 per 2-week pay period) for spending money and $200 per pay period for groceries. On the 15th and the last day of every month, I drive over to the ATM, withdraw $350 (or $360 if it’s an ATM that only does increments of 20) and don’t go back or use my debit card until the next pay period. This forces you to PLAN AHEAD on things that you might want to do or buy. For example, if there is a bar crawl you’d like to attend this weekend and then a friend’s birthday dinner on Wednesday, you’ll have to make sure that you don’t spend $150 at the bar crawl because you won’t be able to go out for your friend’s birthday.