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Why I Love My Envelope Budget System

The following post is from Kate of Modern Alternative Mama:

image source: public domain photos

The food budget is one area that I manage alone.  The rest, my husband and I share (and frankly he does the day-to-day stuff because as long as we agree on the big stuff, I don’t care about the details!).  The budget can quickly get out of control if I don’t “manage” it well.  I keep learning that lesson over and over and over again…someday I’ll remember to stick with it.

In the last months of my pregnancy, I let a lot of stuff slide.  Including the grocery budget.  I bought what I could so that we could get through with minimal planning or cooking.  But then I felt like I really didn’t have enough money to feed everyone!  Oh…sigh.  And my husband was frustrated because I kept going slightly over or saying I needed more money to feed everyone!

After my son was born, it was back to the envelope system.  Then I remembered why I do it.

The Envelope System

In case you’re not familiar, it’s simple.  You pull the allotted amount from your bank account in cash, usually on pay day. Then you separate it out into different envelopes, depending on how much you have decided to spend in different categories.

My grocery budget has these categories:

  • Milk
  • Meat
  • Eggs
  • Preserving
  • Bulk
  • Groceries

I buy the first three items from local farms/butcher, so I set aside those right away.  I set aside money for preserving so I can afford to buy the hundreds of pounds of apples, tomatoes, pears, etc. that we will need. The “bulk” envelope is for things like coconut oil, olive oil, almond flour, etc. that I buy every few months in large quantities.
You can read more about my system here, as well as see a real-life example of what I actually bought (and how much I spent) as well as what meals I made with all of it.
But why do I love it?

1. I know exactly what I have.

I know how much money I have and where it is going at all times.  I don’t have to wonder if there’s money left in the account or if I have spent something online or via check that hasn’t come out yet (leading me to overdraw accidentally).  I know exactly what is there.

2. I can make plans.

I find if I have my money separated out, I can choose meals or items that fit within what I have.  I can purposely choose some cheaper foods one week so I can set aside extra money for a bigger purchase the following week.  I can fit in some treats.  It’s not a guess if the math will “work out” in the end (it won’t, if I don’t do a very specific plan). I know I can do it — or not.  This has been great as I’ve planned bulk purchases and have gotten friends to go in with me so I can get a better price.  I know I already have the money set aside!

3. I have “more” money!

I really feel like I have more money when I plan this way.  I’m not hoping that there’s enough left over after the first couple stores to buy all the items at the last store.  I have set aside all this money and suddenly it seems like there is so much more of it.  target=”_blank” rel=”nofollow”

4. I’m not caught off-guard.

It used to be that when I needed eggs, I had to beg for more money, or wait until the next paycheck and “hope” there would be enough.  Now, I automatically set aside money for eggs.  If I don’t need it, fine — I can choose, later, to spend it on something else (right now I have egg money saved, but about 12 dozen eggs in my fridge!).  If I do need it, it’s there.  I also used to forget about owing my milk farmer and have to scramble to get the money to pay her, often a week late (we pay once a month).  That is always set aside too, so it’s no big deal.  I feel like a real grown up. 🙂

5. I enjoy the challenge.

I spend sometimes a crazy amount of time seeking out sources of food, comparing prices, keeping a mental or physical list of my best prices, and so on.  I set up group buys for items every month or two and deal with collaborating orders, collecting money, and dividing them up once they arrive.  But, I like the challenge of finding better sources, better prices, doing a little extra work to produce a cheaper and healthier outcome!  It’s fun to me.  Am I weird?

Who wants to know how I find all these sources?  I have talked to many local readers who tell me their budgets and their “best prices” on various items, and I know there are better prices available to them!  I’d love to share how I’ve found them, if anyone is curious.

Do you use an envelope system for your grocery budget?  Why or why not?

Kate is a wife and mommy to 4 and is passionate about God, health and food. She has written 7 cookbooks and is planning to release more in 2012. When she’s not blogging, she’s in the kitchen, sewing, or home schooling her children. You can find her at Modern Alternative Mama or contributing to Keeper of the Home.