It’s a new year and a new month, so my husband and I decided get back on track with our budgeting system. We’ve had success using the old-fashioned envelope method in the past — a system in which you create spending categories and set aside allotted funds in separate envelopes (coupon sorter, expanded file, or whatever works best for you). This helped us stick to our budget because after a specific envelope was empty, we couldn’t spend any more in that category. Providing for categories such as his and her ‘fun money‘ kept the system from becoming too restrictive while controlling our spending. Although we had tremendous success with this method, we quickly learned a few things about it we didn’t like:
- It’s tedious to re-fill paper envelopes every pay period.
- It’s inconvenient (and unwise) to tote around envelopes full of money.
Although we tried to modify it to meet our lifestyle, we ultimately abandoned it. So, in keeping with our growing electronic dependency, we decided to try a budgeting app for our Android phones. I have to give my husband most of the credit on this, since he did the research to find the program and set up our preliminary ‘envelope’ amounts. He stuck with an electronic envelope system since we were familiar with it from the past and knew it worked well for us, and chose Goodbudget since it was simple and the basic program is free (doesn’t it seem a little counter-productive to spend money on a budget?)
So far, here is my experience with the system (similar to many other budgeting apps for Android and iPhone).
I enjoy the visibility of our spending.
Since a budget is just a plan, it doesn’t help unless you put it into action. The electronic envelope system on Goodbudget allows you to ‘see’ your spending as you record daily transactions and assign them to envelopes. A level bar gives you an at-a-glance view of where you’re at with your spending in each category, and alerts you to categories that are over-drawn by placing them in red. It can be eye-opening to see exactly how much you’re spending on say, eating out or entertainment, but it’s a necessary first step to correcting the problem.
I have already learned where we need to adjust our budget (or spending).
Since some of our spending categories fluctuate from month to month, it’s difficult to know at first how much to assign to them. Using the Goodbudget app for the first few weeks has been an experience in trial and error, but that’s okay. We adjust it accordingly and move on. For instance, the grocery envelope seems to be spot on, but the gas budget is a little shy. When we see these discrepancies between what we think we should be spending and what we’re actually spending, it allows us to make the decision of whether to allow more funds for that category or find ways to cut back.
I am enjoying the potential for ‘doing things’ with our money.
One of our budget envelopes is titled ‘extra car payment.’ The bi-weekly amount we’ve set at first doesn’t seem significant since it’s only 1/6 of our monthly payment, but it will allow us to potentially cut hundreds of dollars in interest and be debt-free sooner. Another category is titled ‘things we want.’ This will be for larger items that aren’t provided for under our monthly needs such as groceries and household items. Instead of waiting to have extra money, we’re planning to have money for those items. And, as a true shopper, I will enjoy the process of deciding what to spend it on and making the purchase guilt-free.
This is only our first month of using the Goodbudget app, so stay tuned for more updates on how it works for us in the coming months.
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