Save Money And Fix Your budget this year with the dave ramsey envelope system plus a pretty envelope project
WHO IS DAVE RAMSEY?
Dave Ramsey is a national best-selling author and radio host of The Dave Ramsey show. His books include Financial Peace, The Total Money Makeover, Smart Money Smart Kids, and Dumping Debt. He is a financial guru to many (me included) and trusted by millions. His advice is sage and has always worked for our family. Because it is a New Year and the focus is always on doing better in life, I thought I could share this system that works for us.
His ideas are smart, responsible, and financially sound. His envelope system is my personal favorite. We started his envelope system four years ago and it changed our life. We were able to pay off all of our debt (except real estate) and live within our means in only one year!
WHAT IS THE DAVE RAMSEY ENVELOPE SYSTEM?
The Dave Ramsey Envelope system is a cash system that enables you to stop swiping your cards, formulate a family budget, and eventually get out of debt. Each pay-period you will fill your envelopes (think of them as budget categories) with a pre-determined amount. You will then only pay cash from those envelopes for each category (groceries, dog grooming, gas, movies, etc.). When the envelope is empty, you stop spending from that category. There are six basic principles to this cash system that will make it work for you.
1. Know where your money is going every month.
You must first sit down and determine where all of your money is going every month. The way I do this is by going through my debit and credit card statements line by line. I come up with categories and then tally the damage. You know what I figured out? We spend a lot of money on Amazon and eating out.
2. Make a list of your total monthly income and your total monthly debts.
Sit down and make a list of your total monthly income and your total monthly debts. Bills. Your concrete obligations, these are the most important. Do the math and see what you have left to spend at the end of the day. I have seen some people make envelopes for bills, pull the cash out and put it back in to pay the bill. We do everything mostly online so it doesn't make sense for me to do that. Instead, I take the worst offenses and make them into envelopes. Several of my envelopes are depleted each week, and several of my envelopes are saving envelopes. Christmas and Family Adventure are both budgets I set at the beginning of the year and save cash for, all year.
3. Commit to spending with cash only.
Once you figure out where your money is going, have a list of your bills, and a budget for everything else, you will begin to make an envelope budget. You will no longer swipe your debit or credit card. Here are some of my envelopes for example: Grocery, Bulk Grocery, Eating Out, Family Adventure, Entertainment, Pets, and Christmas. I have more envelopes but you get the idea. Every two weeks on pay day, I take out a pre-determined amount (based on what we can afford) and divide it among the envelopes according to the budget. When the money for groceries is gone, we wait. When Christmas rolls around, I have saved ALL YEAR and can spend without worrying about putting it on a credit card or running out of money in December.
That feels good folks!
4. No borrowing.
Once an envelope is empty, you should stop spending. It might be tempting when you want to eat out, and your envelope is empty but Christmas has $500 in it. Don't do it, you will regret it. The only case in which I borrow is between my Entertainment envelope and my Eating Out envelope. Those sometimes go hand in hand. Also, if we were on a Family Adventure and wanted to Eat Out, I would choose from either envelope.
5. Only spend what's in your envelopes.
The most important thing to remember is not to swipe your cards for things that should be coming out of your envelopes. If you forget your envelopes at home, go back and get them. If you run out of money, put things back. I use the calculator on my phone at the grocery store to make sure that I stay within my cash budget.
HOW TO FILL YOUR DAVE RAMSEY ENVELOPES
Many people have many systems for filling their Dave Ramsey Envelopes. Every pay day, I pull out cash from my checking account. I then take it home and lay out all of the envelopes and count the cash to go in each one. I keep the envelopes out and organized so that I can grab the ones I need when I am running out the door. For example, my Grocery envelope gets $200.00 each payday. My Bulk Grocery envelope gets $50.00 each payday. Seem low? I have spent years honing a system where we spend only $400.00 a month on groceries AND stockpile the pantry with hundreds of dollars in products (with NO COUPONS). More on that later. Before we started the envelope system, there were times we would spend over $1500.00-$2000.00 per month just swiping the card at the grocery store and not paying attention. Groceries are one of the biggest budget items that you can have direct control over. Subsequently, it can be one of the biggest offenders in your budget.
OUR PRETTY, ORGANIZED, ENVELOPE SYSTEM PROJECT
Last year, we fell off the envelope wagon and it was devastating to our budget and overall finances. We swiped and swiped and swiped some more. I knew it was time to buckle down and get back on the envelope system. I usually use plain plastic envelopes for our envelopes but this this year I switched it up. I wanted something pretty that would ultimately keep me on track, because um...you know... the pretty things keep me on track.
MY ENVELOPE CATEGORIES:
It starts with the Oxford Notecard Zip Pocket. This plastic zip pocket is the perfect size for cash and the perfect size to fit in a purse. It is important that it zips. Years ago, I used regular paper envelopes and they really got mangled in my purse. The zipper keeps the cash from falling out.
These notecard pockets include a stack of notecards in each one. I took the notecards out and I have them stacked next to the envelopes. They come in handy if I have to write notes to put in the envelopes or a short to-do list, etc.
That left me with the empty envelopes ready to make pretty.
I started by measuring the pocket to see what size paper would fit flat on the front. I then cut card stock from my favorite paper pack to size.
I created and printed out labels onto white card stock. I cut them out and used Crafters Tape to affix them in the center of the cut paper.
I repeated this 11 times with various patterns from the same paper pack.
I was left with a really pretty, organized, envelope system. I store them all in a rectangular chicken wire basket in the kitchen. Neat and tidy with easy access for everyone.
SHOP THIS PROJECT
DAVE RAMSEY BUDGETING APPS & TOOLS