It's been a long time since I’ve written about it, but we use the Dave Ramsey envelope method for budgeting. We don’t follow Dave religiously, but we do like the envelope method for our sinking funds and it seems to work pretty well for us. Twice a month I go to the bank and take out anywhere from $800 - $1500 to fill our envelopes. This works for us and helps us to keep from charging on our credit cards and increasing our debt.

We have several different envelopes, as well as one separate savings account where we budget for car insurance (annually), car registrations, and tithing/giving to our church. Many people have told us we “have too many envelopes”, but we have what works for us.

Recently, as we have a little more money now because our kids are getting older, we went through and determined maximum amounts for our envelopes. Although we’ve never been destitute, we’ve never been in a place to max out our sinking fund envelopes and barely fully funded them each month. Now we are starting to see little surpluses each month and it’s exciting! It’s another sign of progress towards better financial health!

We have 9 envelopes: food, gas, car, household, hair/nails, kids, education, clothes, health/gym. We determined that food will never have a maximum because we buy ½ a cow every year and any excess in food will go towards that. We allot $600 a month towards gas and determined that the maximum we will put/keep in there will be $1000. We’ve never reached that before, but right now that envelope is sitting at $715, so we are getting close. Car is another envelope that will never max out. Car repairs come when you least expect them and can often be expensive! We have $440 in our car envelope right now. Household to us is shampoo, soap, paper goods, cleaning products, etc. and we set a maximum of $500. We’ve never gotten anywhere near $500 and usually that envelope is running at a deficit, but I’m hoping with fewer expenses and that we are now funding our envelopes with higher values, we will get there. We just did a big Costco run and got toilet paper (X2), deodorant (X2), ziploc bags, and dish detergent, and because of all that, we have $0 in that envelope, but will be filling it with our next paycheck. Hair/nails will max out at $500 as well. I actually only get my hair cut about once a year, but I’m going to be honest and say I love manicures and pedicures, although I don’t get them as often as I used to. This envelope currently sits at $290 so I could see us maxing it out in the near future. Both The Kids are now high school graduates and adults, but we decided to keep our “kid” envelope for various and sundry things. We will max “kids” out at $500. This envelope has $180. Our education envelope doesn’t have to be used to pay for senior year anymore, but as I am a teacher I am constantly paying for things for my classroom. The money in that envelope will be used towards mainly that. (The Daughter has decided she wants to be a personal trainer and as she has decided not to pursue college, we will pay for her certification course for personal training. Much of that will come out of the “education” envelope.) Once we have paid for The Daughter’s personal training course, that envelope will top out at $500. We have $0 there now as I just bought pens and pencils for my classroom and paid for my Sunshine Club membership; but we will keep plugging away at that envelope. Clothes and shoes can get expensive. This envelope currently sits at $390 and will top at $1000. Our last envelope is health/gym. We pay $160 per month to see a personal trainer. That envelope will top out at $320 which is two times our monthly cost. Currently, that envelope has $280 in it. We will only budget $40 toward it this month as that would bring us to our maximum.

Our sinking funds (not including car registration and insurance, which is directly deposited into its own savings account) sit at almost $2500. We are happy about that and feel like our sinking funds are another barrier between us and sinking further into debt. Of course we hope to only use the envelopes for their prescribed categories, but in a pinch this could function as another emergency fund.

These are the envelopes that work for us right now and as life changes, so will our envelopes. In the past, we have had envelopes for pets, dance, sports, etc. Each season of life leads us in different directions and with different financial responsibilities; there is no one way to do anything and this is what works for us right now!