In an effort to keep better track of our budget in the new year, my husband and I decided to utilize an electronic version of what is often referred to as “the envelope system.” Goodbudget, a free application available for Android phones, is just one of many possible budgeting app choices (another way your smartphone can save you money). Using this system is putting us on track to achieve (and already helping us achieve) many of our financial goals, both short and long term.
In my last blog, I shared what I appreciated about the budgeting app known as Goodbudget: the visibility of our money, the ability to easily analyze and tweak our budget envelopes, and the existence of designated money for discretionary spending. Last month was our first full month of experience with the system, and since then we’ve gained a better understanding of it and have been able to make some changes and adjustments to increase the app’s usefulness to us.
Although all the initial benefits of using Goodbudget are still true, there are a few more things I’ve noticed and would like to share.
Paid vs. Unpaid Account Differences
At first, we stuck with the free version of the app, which included a set number of budget envelopes. This seemed to work okay for a few weeks until we realized this wasn’t enough. Lumping together our bills into one envelope for the month was inefficient because we couldn’t easily see which ones we’d paid and which were left. We also had too many expenses that only fell under “miscellaneous needs.” So, at the end of of the month my husband decided it was worth the $5 a month to have unlimited envelopes. The paid version also allows us to link the budget to our checking account so we can verify actual expenditures, not just theoretical ones. We haven’t linked the account yet, but plan to. My only concern with this is an increased security risk.
The Importance of Under-Budgeting
My husband, the budget guru, decided to always leave some money unaccounted for, in spite of the temptation to over-budget. Especially with all of our new envelopes, it would be easy to get carried away and budget down to the last penny. We quickly learned that this was a wise safeguard, particularly since we’re still discovering rare or occasional expenses that could throw everything off if we didn’t have any wiggle room.
The Realization of Planning
Two of our envelopes last month were designated as “fun money” for both of us. At the beginning of the month, we re-loaded those envelopes. Since I’d only spent part of mine from the first two weeks, I had a larger amount to spend after the second bi-weekly paycheck since we’d made those envelopes accumulative. The realization of our planning allowed me to spend my birthday money guilt-free! It reminded me what it feels like to be in control of your money, and the freedom it creates.
We are still on this budgeting journey and have much to learn, but we have already discovered a lot in just over a month. One of the biggest advantages of budgeting in general has been the increase in our feeling of empowerment and control over our current and future finances. Having a plan is ironically one of the best ways to enjoy more spontaneity and freedom with your money.
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