Looks like we’ve been using the envelope system for just about a month now.  I must admit that so far it’s working out quite nicely for us.  We’ve had a few one-time expenses that weren’t part of our categories, but I still had a couple hundred dollars from our tax refund that hasn’t been applied to anything yet so we just used it from there.  It will be important to account for stuff like this in the future though, or else we may have to go without on something.

Current Envelopes

Here’s our current envelope breakdown (needs in bold):

Photo by amypalko

1. Groceries
2. Automotive
3. Clothes
4. Health/Hygiene
5. Medical
6. Extra Curricular
7. Gifts
8. Pictures/Crafts

Unaccounted Expenses

Here’s a breakdown of what we had to spend money on that wasn’t accounted for in our system:

1. Camping equipment for 1st time backpacking trip for scouts.  ~$50
2. Vet bills for dog.  ~$100
3. ER visit bill I forgot about from last month.  ~$90

The camping stuff is completely reusable for future trips and for even the younger boys when they get old enough, so I don’t have a lot of issues with that.  I think we need to work out more effort on the fund-raisers for them in the future though.  I’m not spending out of pocket for all the stuff we need every year, and the extra-curricular envelope only covers annual dues.

The vet bill is a once-a-year kind of deal, and we’ll be adding another envelope for animals to account for this next time.  I have no idea why I forgot it in the first place, our pets have always been a small expense in our past budget attempts.  We just include pet foot as part of our grocery budget, so totally slipped on this one.

The ER costs I’ll get reimbursed from my flex spending account at work, so that doesn’t concern me much that we didn’t have enough built up in our envelope for that.

How We Measured Up

So it may seem like we’ve completely blown our envelope system with these, but I still consider it a very successful month.  The rest of the categories we’ve managed to stay within budget or even under budget.  The first few months are always the hardest, so we’ll keep at it and see how well we do next month!

Since this has been quite a success for us for budgeting our cash-flow expenses (i.e. stuff that doesn’t show up in monthly bills like mortgage, utilities, debts, etc.) the last month, I’m going to spend the rest of the week demonstrating how we created our envelope budget system and show exactly how we’re going to modify it as we find expenses we didn’t account for…or find that we’re not using everything in each category.

So stick around, subscribe to my RSS feed/email updates,  and see how we’ve done it!

Update: Check out the follow-up posts on How to Create an Envelope Budget System and How to Evolve an Envelope Budget System!