Simple envelope-style budgeting

Since taking Dave Ramsey’s Financial Peace University, my fiancĂ© and I have been strict budgeters using his recommended envelope method. At the beginning of each month, we sit down to review our previous month’s budget and decide on dollar amounts for certain things for the next month.

It works like this: We budget $500 for groceries in February. We then go to the ATM, withdraw $500, and put it in an envelope labeled “Groceries.” Every time we go to the grocery store, we grab that envelope and pay with the cash inside. If we run out of money, no more buying groceries…

We do the same thing with other categories of spending, like entertainment, restaurants, and vacation money.

We did it this way for a month, but the nerd in me thought that there had to be a better way.

Enter Simple

We use Simple for our shared bank account. It helps us pay rent and our bills on time, and is good practice for us sharing a bank account when we’re married.

Simple makes it easy to do this envelope-style budgeting with their “goals” feature. Instead of having a physical “groceries” envelope, we have a monthly “groceries” goal. When we go to the store, we swipe our Simple debit card and then categorize that transaction to take money out of our “February grocery” goal.

Every transaction is spent from one of our goals:

What we spent in February

Here are our envelopes for February:

Our envelopes for February

You can see a few more of our goals in there to pay for things we have coming up, like our wedding photographer and our honeymoon. These help us save over time.

How it is working for us

As you can see, we’ve already hit $0 in a few of our envelopes, and even spent past our budgeted amount. If we were using physical envelopes and cash, this would be impossible.

Simple makes it super easy to see what money we spent from our goal, and identify problem areas:

What we spent on groceries in February

For us, the biggest problem area is groceries. Costco is full of great deals, but we can’t seem to make it out of there without spending $150. Our bi-weekly trip there is putting us way over budget, but our cabinets are filled to the brim.

We need to have more self control, and I don’t think this super easy Simple + debit card solution is working for us. It’s convenient and easy, but spending our hard earned money should be painfully difficult.

There’s something completely different about parting with crisp twenties. It’s visceral. Numbers on a screen and swiping a plastic card don’t mean nearly as much.

Despite how awesome Simple is, it looks like we’re going back to cold hard cash budgeting and paper envelopes.