Having a tight budget is hard, even when it’s a choice you made when you decided to be a stay at home mom. Few families find it financially easy to go to that single income, but it’s a choice many families make.

Managing your finances well is one of the big keys to coping with a tight budget. You have to be very aware of where your money is going – a good habit even if your budget isn’t all that tight.

envelopes for budgeting

A very popular way to cope with money issues is to use envelopes, and pay cash for as many things as possible. While rent/mortgage and other bills may need to be paid by check, grocery shopping and other things may be better off paid in cash. This money is generally separated into an envelope for each purpose.

Paying in cash accomplishes a couple things. First of all, if you have cash, you can’t go over budget. You become very aware of how much money you are carrying. Second, it makes the money more real to a lot of people. Paying by check or credit card, it’s easy to ignore what you’ve just spent. With cash, you KNOW.

So how do you decide how much goes into the envelopes?

First you need to figure out all the bills. That’s rent/mortgage, utilities, insurance, credit card or other debt payments, etc. Subtract this amount from your available income.

Now start figuring out how much money you need for each envelope. You should have envelopes for groceries, gas for the car(s), eating out, medical, or whatever your particular needs are. This will vary from family to family of course, and depends on your needs.

Yes, if you are going to do fun things like eat out, you should budget for it. Don’t let those little extras completely ruin your budget. If everything has been planned out, then you decide to do something that wasn’t budgeted, you can ruin your careful planning. It’s much better to admit that you will do some fun things and figure out what you can spend on that.

It may take a bit of time to properly balance your envelopes so that you aren’t struggling to keep your spending within what you put in each. It will also be necessary to regularly review what should go into each. Just think of how much gas prices have changed in recent years!


One way to figure out how much money you need for everything is to review what you have been spending. If, like most people, you don’t have receipts for everything you’ve bought for at least the past 1-2 months, take a month and track your spending, every penny of it. Don’t try to limit it more than you are planning on doing once you’re using the envelopes. You need a realistic estimate.

Some envelopes should be preplanning envelopes. Just think about the various budget-breakers that come up all too often, such as medical bills and car repairs. If you’re setting aside a little bit for them, they make less of an impact when they happen.

Clothes shopping would also often fall into this category, especially with kids in the house. You may or may not be buying clothes for someone in your home every month, but it adds up fast those times that you have to shop.

If you get good at this type of budgeting, you gain a lot of control over your money issues. It’s really amazing what being aware of exactly where your money is going can do for you.

Not the paper envelope type? There’s a great online program called Mvelopes Personal that works on the same principle. They even offer a free 30-day trial so that you can find out if their service is for you. If you want to find out where your money is going, this is a fabulous tool that often more than pays for itself. This kind of a system is more my own speed, in fact. I’m much more into keeping track of things on my computer than in envelopes.