Back in September I wrote about how I started back with the Cash Envelope System. I loved getting back into the cash routine, and 5 months later I still love it!
The categories I use for my cash envelopes are:
~~Groceries ~~Eating Out & Entertainment ~~Gasolene and Bridge Tickets ~~Household Needs ~~Babysitting $$ ~~Gifts ~~Haircuts, pedicures, other personal stuff ~~Allowance $$ for the Hubster and I (We give ourselves an allowance to use for whatever we want, no questions asked and no need to keep a record) ~~Clothing Fund
For you, there might be other categories you would include or exclude. It's great that you can customize it to your needs.
When I started using cash again, I also started using a budget sheet every two weeks. Because we get paid every two weeks. I budget how much I'm going to put in my envelopes for each category for that two week pay period, making sure that I have more money than bills. At the beginning, there was a bit of guessing going on, but as we've lived this out the last few months, we've found a rhythm to how much we need for each cash category. I've been able to trim our gas fund and grocery fund a bit whereas our gift fund went up significantly over the holidays.
Now going into 2012, I have a better sense how much to save in my envelopes for those longer term funds like gifts, vacations, household needs (like a new club chair) as well as those funds that are spent every month like groceries, gasolene and eating out.
As I was talking about this with my husband the other day, I realized that what I really love about this system is just how much I feel in control of our outgo now. I like seeing it on paper and seeing the cash in the envelopes. I like knowing that there are cash funds that are building up over several months to purchase bigger items that are on our wish lists and not getting spent on frivolous items we dont' really want or need. I guess what I like is it keeps me disciplined and on target, both shortterm and longterm.