The Envelope Budget

I’m not sure when I was introduced to the envelope system for budgeting.  I know it was well over 20 years ago, however.  My mother-in-law may have been the first one to suggest it early in my and Jennifer’s marriage.  Regardless where the idea came from, we have been using this method in some form for nearly our entire adult lives.

I have always enjoyed working with numbers.  In high school during the mid 80’s, I took an Accounting class as a junior and a 2-hour per day Computer Accounting course as a senior.  Personal computers were not commonplace at this time and the exposure to them in our classroom was rather extraordinary in hindsight.  But these classes helped me to develop a relationship with money as a tool, and not just as the thing I needed in order to buy the stuff I wanted.

After high school, I worked full-time and started taking courses at our local vocational school in Indiana, IVY Tech.  Today IVY Tech is an accredited community college, but back then it was a trade school that operated on a quarterly class schedule rather than semesters.  But they offered some accounting courses, so I enrolled.  I soon realized the education I was receiving was not going to prepare me for a well paying job in the future.  So 2 years after high school graduation, I decided to join the Air Force.

The enlistment process was to follow the typical routine of traveling to the Chicago Military Entrance Processing Station (MEPS), undergoing a physical, signing a lot of papers, and finally taking the oath.  All was going well, until we got to one of the last sets of paperwork.  The Air Force asks that you write down at least five different jobs you’d be interested in performing as your Air Force Specialty Code (AFSC).  Based on the needs of the Air Force, you would be placed into one of these five.  I wrote down one AFSC, 67231, Financial Management Specialist, and handed in the paper.  This did not please the recruiters working in this office nor my recruiter from back home.  Nevertheless, that’s the job I wanted and if I couldn’t be guaranteed that AFSC, then the Air Force and I would have to end our courtship.  I left their office and drove back to Indiana.  By the time I arrived at home, my phone was ringing with a promise to place me into that AFSC.  The next morning, I drove back to the Chicago MEPS and completed the paperwork.  I spent the next 20 years working for the military in the Financial Management office and graduated from Governors State University with a BA in Business Administration and a MA in Management and Leadership from Webster University (thank you Air Force tuition assistance!!).  Lesson: If you don’t know what you want to do, being open minded can lead to wonderful experiences.  If you absolutely know what you want to do, pursue that route with vigor or someone else will use you to achieve their own objectives.

Managing our personal finances has been an important part of our marriage.  The method we use has evolved over the years.  We never literally used envelopes stuffed with cash, instead I started out with multi-column ledger paper and tracked our expenses in written form.  The target budget amount was identified and compared to total of that column as expenses were incurred.  I bought our first home PC in 1996, an Acer Aspire.  I was soon using spreadsheet software, like SuperCalc, to track our “envelopes” and soon thereafter began using Microsoft Money.  Microsoft Money’s last update was its 2006 release.  I continued to use this software until I got my first Mac.  In 2011 I discovered Moneydance as a Mac alternative to Microsoft Money and Quicken for Mac (which did not receive very good reviews).  I have been very satisfied with the program for several years now.

I have even created some tutorial videos regarding how I establish envelopes in Moneydance, budget, process transactions, reconcile, etc.  Originally, I recorded the video for our daughter and son-in-law to help them establish a budgeting process soon after they had completed the Dave Ramsey Financial Peace University (FPU) course that I led at our church.  They had also recently moved to Colorado for a career opportunity, so managing their finances properly was going to become even more important due to the higher cost-of-living area they relocated to.

I am currently reading a book by Jesse Mecham titled You Need A Budget.  The material is fantastic.  I have also been listening to his podcasts over the past couple months.  Quite honestly, I feel he and I follow primarily the same philosophy (with some minor exceptions) regarding managing personal finances.  The book and podcasts are primarily to market his budgeting software of the same name, or YNAB for short.  I have watched a couple tutorial videos for his software and although I think it is fantastic for those starting out on a new budgeting journey, I don’t see myself abandoning my system.  I just know it too well and it achieves the same goal as his program, just in a different way.  If you would like to get control of your finances, and therefore your life to a great extent, I would encourage you to look for an FPU course near you and/or check out YNAB.  If I can answer any questions regarding my process or just how to take the first steps, please feel free to contact me.  I’d love to help.



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