File Folder Budget
by Kari Anderson
(Muscatine, Iowa, USA)
Kari at River Thames, London, England
My method is pretty much like the envelope method...except I use a plastic expanding file folder which I keep locked up in a strong box, because the cash does seem to accumulate in it.
Funny thing about cash to me....it's harder for me to spend than money through checks or a credit card. I usually see cash and think, "Wow, that's mine. I want to keep it!"
I don't use very many catagories, only a few main ones that were causing me consternation when we just kept all our money in the bank.
I would often see all this money in our checking account and think, "OK, we have lots of money, I can buy this or that." Not realizing that next week we needed to pay say, $2,000, in taxes for some such thing.
I was "fooled" into thinking we had lots of money. It always confused me so much so I asked my husband if I could devise a better plan.
Since we were raising seven children we'd already maintained a frugal lifestyle when it came to food, clothing, entertainment, so I didn't include those catagories. Also, we regularly put in about 12% into savings so also didn't include that.
I made these catagories: (the ones that were causing me consternation) 1.Tithe,10% 2. Second Tithe,10% (Mission trips,etc.) 3. Poor fund,3% 4. Taxes 5. Insurance 6. Allowance 7.Any one-time projects
My husband helped me figure out the total year's taxes and insurance (we're self employed, so need to take out our own taxes) which I broke down into monthly payments.
Then, when I cash each paycheck, I get enough cash to put into these file folder catagories.
Presto! When the tax man calls....we've got the cash all ready set aside. We write a check and I deposit the cash.
Presto! Insurance needs to be paid....we've got the cash. We write a check and I deposit the cash.
Presto! Someone needs help....we've got the cash in our Poor Fund. We share.
Presto! Some of our kids wants to take a mission trip....we've got the cash. We'll often use a credit card to get airmiles, and put the cash in the bank to pay off the card expenses.
I'm not longer fooled into thinking we have more cash than we really have.
This has worked marvelously for me and I'm so excited to have figured it out.
I especially like having money for trips....and we've traveled tons. Saving 10% for trips is so exciting. I love counting out the stash of bills, knowing we have enough for a trip. (This summer my husband and I will visit Romania, for example) Want to see where else I've traveled? "What, Kari is Going Again?"