Many people I talk to don’t use the envelope system because they think they will be walking around with large amount of cash, especially at places like the grocery store. Initially this was one of my concerns too. Then I figured out a way to use the envelope system while not carrying huge amounts of money while shopping.
Depending on how often you shop, divide your monthly grocery budget by the amount of trips you make to the store. Now, if you are shopping every day, this could be a challenge, for you, I suggest dividing your grocery budget by four.
My February grocery budget is $600, divided by four that gives me $150 each week for groceries. On my first trip to the store I pull out $150 from the ATM and put it in my grocery envelope. I use the $150 to pay for that shopping trip. Most likely I will have money left over and that stays in the envelope for the rest of the week. I can use the extra, if there is any, to pay for quick trips to pick up essentials if necessary.
Each week, you pull out your weekly amount right before you go to the grocery store. You spend the money right away and are not carrying around large amounts of money in your wallet. I usually only have $20 to $30 in my grocery envelope after shopping.
I use the ATM since my bank does not charge for withdrawals, but if you are charged a fee, stop by your bank and cash a check for that amount each week.
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Ruthie says
I put my monthly grocery budget on a grocery store gift card. I know that doesn’t work for a lot of people who shop at multiple stores, but I shop mostly at one store so the gift card is working (so far). I also took my label maker and labeled different credit cards with budget categories. Each card is used for only one category. I know credit cards are a risky thing, but for us it’s working (so far) because it’s hard to for my husband to always get a receipt. I can look online daily at each account to make sure we’re staying on track, etc.
My problem with the envelope system is that I felt embarrassed. I know this is wrong on my part, and I really need to just get over it. It just made me feel like a child.
I like the idea of stopping at the ATM before the grocery though! What do you do with cash left over after each trip?
MNKristy says
I’ll tell you what I do…I bought a plastic coupon holder and labeled each pocket with my monthly budget categories…for example, auto, clothing, entertainment, dining out, groceries, household, and skiing (yes, skiing is a category in our house!). Each month after payday, I write myself a check for the total amount of all those categories and go to the bank and cash it, asking for a variety of denominations of bills. When I get home, I divide the money into the coupon holder, placing the appropriate amount behind each divider. When I go shopping, I take the necessary amount of money from each pocket and place it in my wallet. When I get home, I put any remaining money back. If I need money from more than one category, I just write down what I took out from each on a post-it note. This system works well for us and is good for building up a stash of money for expenses like car repairs that you don’t need every single month or for skiing which we only need during the winter months.
Karen says
We use the envelope system. We’ve been doing it for 3 years and it’s just second nature now! I go to the bank each payday with a post-it note with what cash I need and in what denominations. I sort our cash into bank envelopes right then and there (I even carry a sharpie to label those envelopes)! All the envelopes go home and get put away (guitar lesson $ goes into the guitar bag/ spending money “blow money” goes into our respective wallets/ other envelopes go into a specific drawer). Grocery money gets 2 envelopes (one for my purse/ one for the drawer). I only really shop once per pay period, but I leave $40 or so in the drawer for a quick trip or if dh needs to pick up something…
I thought I would be embarrassed too, but I quickly realized how much I was saving and that permanently shifted my attitude. Not to mention, the comments I do get (and I do get them regularly) are all very positive! I’ve had the opportunity to explain the system/ Financial Peace/ living debt free to many many people thanks to those envelopes!
Keli says
I am trying to get into using the envelope system. Hopefully we’ll be starting it this week.
Nancy says
I started using cash for several categories in December, including groceries. On payday, I get cash when I’m depositing the paycheck. I have alotted $225/2 weeks. So far, so good. I’ve managed to stay under budget every time and we’ve been eating quite well. I also like that it makes me be aware of the choices I make as I go down every aisle.
Christian Mommy Writer says
We just started using cash for food this month and it has been working well. You think more about putting that extra item in the basket when you have to pay cash for it! 🙂
TheHappyHousewife says
Great idea Kristy! I like the idea of using a coupon holder! So frugal 🙂
Nicol says
We do the envelope system in our house. (All inspired by Dave Ramsey several years ago.) I find I spend less. I do take out all the cash at once (twice really, once for each paycheck). Anything I don’t need goes into our home safe.
I actually made some new money envelopes today to keep everything separated. I posted them on my blog earlier today.
BarbaraLee says
I like using cash too. It is harder to give it away when it is in your hand.
Barb says
We are also starting the envelope system. We started it in the past but for some reason turned away from it. However, we are very much focused on reducing debt and are going back to the envelopes. I plan on going to the ATM to withdraw what we need for the pay period. I am trying to get out of the habit of using our debit card, but with USAA offering those points each time you use it, it makes it even harder 😉 I am trying to only use my debit card when we need gas but that is because with us living in Alaska it is the smart thing to do =)
Sheila Gregoire says
We always pay cash from a budget for groceries, too!
But let me just say that this isn’t ONLY about being frugal or saving money. I think people should be doing this even if their income is higher and they can afford it easier. (I’m not suggesting you were saying that it WAS only about being frugal; I just want to drive this point home that I’m sure you agree with anyway!)
Spending money wisely is something everyone should do, even if they’re not hovering on the brink of debt, because it’s all about good stewardship. We only have so much money, whether it’s relatively a lot or relatively a little. There still is a limit. And if we have more, we can give more and make a big impact in places like Haiti. But we can’t do that if, as soon as our paycheque increases, we throw out the envelope system and decide that we can now spend whatever we want!
So if we want our lives to be responsible and to count for something, we have to keep the envelope system going. It’s not just when income is tight, it’s forever, so that we make sure we make the most out of our lives!
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Melissa says
We cash one check per month for our grocery envelope. We usually do our shopping on the weekends so my husband will ask me before we go out how much I think he needs to bring along. When we get home we put any remaining money back in the envelope. We usually use all the money in our envelope but have just rolled leftover $ before by writing the next check for that much less. At first it does make you feel weird paying with cash since so few people actually do it and to add to that anxiety, every time we went to Publix they would check every single bill to see if it was real – OMG! Now they usually only check the $100 bills but sometimes still check all of them!
Accounting Services says
Its a very good and thought provoking idea that how can we manage our house groceries and balance in our savings. I also follow almost your way!
Thanks for sharing!
Jessica says
I do the exact same thing! My $4 coupon holder has saved me many of the headaches I had from when I was using envelopes!
Judy Lorensen says
I don’t have the money to out back and with jobs as bad as they are my kids need help to feed their children and my grandson has to eat he has lukeumia he has to eat because he has and possibly does keep his sugar under control