the envelope method

When my grandparents, who are both people I very much love and admire, were in their twenties and thirties, they had four young children and very little money, despite the four jobs my grandfather always seemed to be working at once. My grandmother kept all their spending money in envelopes. My grandfather would get a paycheck, hand it right over to The Boss, and she’d cash it and separate it out, based on her budget. She’d put a certain amount in the “groceries” envelope and a certain amount in the “bills” envelope, and when the cash in an envelope ran out, that was it until the next paycheck came along. Sometimes she’d borrow from one envelope to cover another, but she never spent more than what was in those envelopes. Credit cards existed, but they didn’t have one.

She suggested to me years ago, when I was broke and needed to learn to budget my money, that I try this method too. It made sense to me, but seemed rather difficult to follow, considering all the different ways one can pay for something now. If I was out of cash, what, besides old fashioned will power, would stop me from using my debit card or credit card or just going to the ATM to miraculously replenish my cash supply? That money doesn’t come out of my bank account, right? 

Today, since I have a consistent salary, I don’t have trouble budgeting my money like I did during college. I now make enough to cover my expenses, and I have a little left over to go out to eat from time to time. I’ve gotten much better as I’ve gotten older at not spending beyond my means, but that’s probably due in large part to the fact that those means are enough to cover my lifestyle.

I will say, my lifestyle is still relatively frugal. I don’t buy new clothes or shoes (like, ever). We don’t go to the movies very often, I don’t go to bars (like, ever), and I rarely take taxis. The bulk of my disposable income is spent on eating out, traveling and buying a new book every once in a blue moon. We’ve even quit buying paper towels. (Kevin’s idea. Who is this man?! I love it.)

So when I consider how I’m going to scale back when I quit my job and have to float myself on my savings and part-time work time for a little while, I wonder where, exactly, I’m going to scale back.

Basically, if I want to spend less than I do now, I have to be accountable for everything I’m buying. If I don’t need it, can get it at home, or won’t really enjoy it that much, I probably shouldn’t spend money on it. We’ve already started making our own iced coffee, which I’ve boasted about before. My stepdad pointed out to me that it’s saving me around $60 a month to be doing that, which is just awesome. But there are still other places I can cut back.

Although Kev and I have gotten so, SO much better at buying and using groceries, I still sometimes forget my lunch at home, or don’t feel like making it the night before, so I end up spending $14 on some stupid salad and piece of bread. Sometimes I won’t feel like cooking the perfectly good food in my fridge, so we’ll go out to eat and get drinks too, and suddenly have spent $40 without batting an eye. That’s all well and good if I’m not working within a strict budget, but if I am, and since I will be, that stuff has got to take a backseat for now. Even though I can still afford to do those things today, I want to practice spending less before I quit my job, so I’m not thrown into the pool without knowing how to swim.

We got paid at work today. And I’ve decided to do a dry run with this new less-spending concept. This is where my grandmother’s envelope method comes in. I’ve withdrawn all the spending cash I’m allowing myself until the next payday (and it’s not that much, so don’t come find me a dark alley because you will be sorely disappointed) and I’m going to keep it in an envelope (no, I’m not going to carry it with me, Mom) and take cash out to spend as I need it. And when the money in the envelope is gone? That’s it. I’ll then have to live off free cereal at work and the old frozen cranberries from last Thanksgiving who own an apartment and little back patio in my freezer. And that’s just all there is to it.

Maybe it sounds a little strict, but it’s really not. I don’t think it’s going to be that hard, frankly. And I’m sort of excited by the challenge. I will definitely think twice before I decide to buy a new magazine or an expensive cocktail, because seeing cash slowly drain from that envelope will be hard to stomach. I just have to do this for myself – I have to create a visual relationship with what I’m spending, otherwise I’ll never stop buying lattes here and there.

Sure, when I quit my job I could just rack up a few grand on my credit card and call it a loan to myself, but that’s just gonna come back to haunt me later in life. I’ve lived that put-it-off mentality before and I’ve also lived through the days when I had to finally face what I’d been avoiding. And all it did was make me wish I’d made better choices the first time around. I now prefer to avoid that regret.

Since I can taste the day I’ll leave this job, the idea of avoiding extra speciality coffees in order to make it happen seems so easy right now. Who knows, maybe it will be harder than I’m imagining. And I’m sure it will be a process and take some time to adjust to. But I’ll have the satisfaction of knowing that the money I would have spent on a latte is going to a good cause – a selfish cause, but still a good one: My Freedom.

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5 thoughts on “the envelope method

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