In the beginning we were both managing working full time, going to college full time, and getting adjusted to being a married couple trying to figure out how to run our finances. Being newly married, as most couples do, we got a joint checking account together. This meant one checkbook and two debit cards. It was hard to keep track of two people spending out of one account. Trying to remember to write everything down and waiting for checks to clear. It is so easy to swipe that debit card and really realize how much money you are spending. If you are not careful, this can lead to overdrafts and unnecessary charges. It did not take us long to figure out that this system just was not working out for us and thank goodness we realized it before we had an overdraft on our account. The envelope system for budgeting is not a new concept but for us it truly was a life saver! Using this system totally set the pace in learning to keep track of our spending and beginning our path to savings.
It all started with a book given to us as a wedding gift from our good friends. This book was full of great tips about starting out in a marriage but the one thing that stood out the most was "the envelope system". This system allowed us to break down our spending into different categories and allocate a set amount for savings. Here is a breakdown of the steps we used to set this up:
1. Setup your budget categories and mark the envelopes.
Everyone's budget needs are different so setup the categories that work for you. Our
If you are a couple, split the allocated money between the two of you or set a neutral place to
keep the envelopes. We kept our envelopes in a filing cabinet in our home office. With our
different work and school schedules, we needed a set place where we could each find the
money when needed.
4. Set the rules.
Set guidelines for using your envelopes. For instance:
When the money is gone out of the envelope, then it is gone.
No more money will be added to the envelope during that month.
Money cannot be taken from one envelope and added to another.
Any money left over at the end of the month; goes directly into savings.
We did periodically go back over our budget and where the money needed to be allocated. We had to make changes because what we had set for groceries was just not attainable or we had to increase our allocation for gas money because we had to travel to clinical or student teaching positions. It is a constantly evolving process. We did have to borrow money to help pay for our tuition. The thing that kept us from getting in to deep was our ability to budget and not use borrowed money to pay monthly expenses. The key is to always spend less than you bring in.
It has been shown over and over again that finances can really strain and in some cases, end a marriage. In all relationships, communication is key; especially when it comes to finances. Not everyone will agree on how much to spend or how much to save but talking about it and coming to a comprise will save time and save the relationship. Discuss what you want your future to look like. Does it include big purchases, travel, home renovations? Set goals and make a plan on how to achieve them. Set rewards for yourself. Being on a budget does not mean you cannot ever buy anything extra or go anywhere; plan for it. We decided that we would not spend money on Christmas gifts and birthday gifts for each other, but rather use that money to reward ourselves and take a trip. We quickly learned that we would not remember all the "stuff" that we bought but rather the memories that we made together. Take small baby steps and give yourself rewards along the way. You might not get it right on the first try but you can always make changes and make it work for you!
