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I vaguely remember way back when I first got married. It was in the 70’s and I remember it being a big thing for people to buy and sell items at flea markets. I can’t remember how or why I got the book, but there was a section in the book about how the author got out of debt by using the “Envelope System.” The name of the book was “The Lazy Man’s Way to Riches.” by Joe Karbo. It was published in 1973.
Imagine someone becoming rich by using envelopes! Obviously, he did not get rich by just using envelopes, but the idea has apparently become a big thing.
I have alway been a saver and I believe I have always been pretty acclimated to the idea of “saving” up for purchases, etc. My parents were WWII, depression era, so they were always very frugal with money. But not all of my siblings naturally gravitated to this way of handling money.
I always believed that if you got paid weekly, that you should divide your monthly bill by 4 and set it aside each week so you would have the total amount when the total amount was due. I never could figure out, for example, how if someone had a $400 a month rent and they made $400 a week, how they would always say they did not have enough money to pay their rent and eat and buy gas when the rent was due at the first of the month. I always thought that if that person took out $100 a week for four weeks, for each expense and put it away, that they would always have the money. I used to work with a person in a beauty salon that would always say that when she had a bill due, she would just work extra hard that week and have faith that the customers would come and the money would be provided. I don’t want to say that I am not a person of faith. I just believe that God expects you to use common sense.
I have always been this way, even before I ever heard of “Envelopes.” I don’t remember being “taught” any of that. I am naturally what Dave Ramsey refers to as a budget “Nerd.” I have always believed that you should put money aside for emergencies, because they always happen. That was way back when there was no internet, smart phones and budgeting apps.
The next time I heard of an envelope system was probably 15 or so years ago. The system was software called Crown Financial Ministries. I took a budgeting class at church and somehow found the budgeting software developed by this company and used it for a while.
Later in about 2012, I found YNAB. (You Need a Budget). This used to be software and has since become a web based subscription. It works like a check register, in that you can import your transactions, just like Mint or some of the other apps, but unlike Mint, it will let you create a “zero based budget, “ which basically means, you import your deposits and assign all your dollars a “job” until all of the deposit has been assigned to a category. You can set goals and accumulate money into different “categories” (i.e rent, etc.). For example, if you get paid weekly and your rent is $400 a month, for each paycheck you receive you can “assign” $100 (starting, immediately right after you pay for this month’s rent. What is not used in a month will “roll over” to the next month. This can allow you to look at your “budget” on your smartphone, when you go to the store and actually “see” what you have available in each category. You can also start saving monthly or weekly towards yearly bills like car insurance and property taxes so you won’t get “surprised” when the bill comes.
Dave Ramsey also has an app called “EveryDollar” that is free to use, but it does not import transactions from your bank, unless you pay for a subscription, so you have to manually enter them and does not have the “checkbook register” option, but would be great if you could not afford to buy any software of pay for a subscription.
So, if you haven’t figured it out, these apps are really a digital envelope system. But instead of having the physical envelopes, each category is actually an envelope.
I realize that, not everyone handles their money this way. I have been told by a lot of people that they don’t like my way of setting aside money every paycheck, but it has worked well for me.
But I have done a lot of research and almost everybody that is anybody with any knowledge of handling and getting ahead with money – recommends having a budget, so this is not just my way, this is the way most money experts suggest as the way of getting ahead and also, getting out of debt. A lot the people that have gotten out of debt and do “Debt Free Screams” on the Dave Ramsey shows actually like using the physical envelopes for categories like groceries and eating out. They say once the envelope is empty, then they couldn’t spend any more, and rather than going into more debt, they learned to gradually adjust what they needed each pay period.
Tune in to Dave Ramsey on YouTube and listen to his podcast of people that have gotten out of debt. They will also say they did it by following a budget.
