Grocery Budget Extreme Makeover Part III

Level 1: Bargain Belle

Challenge Yourself
• Use an envelope system for groceries this month, if you’re not already. See how to set one up here or where to purchase one here. (15 minutes to set up if you have not made one before)

• Challenge yourself while using the envelope system. Instead of putting your entire grocery budget for the week or month into the envelope, put in only a percentage of it. Try to make it to the end of the week or month without adding your reserve. If you really need it, you know you have it. Be proud of yourself when you don’t have to use it. (No time, unless you need to add the extra cash to your envelope)

• Personally, I use two envelope systems, one that I carry in my purse and one that I keep at home. Once a month, I write a check to myself for the amount we will need for our monthly “envelope” expenses. Then I distribute the money into the two different envelope systems, putting the bulk of it into the one I carry, and lesser amounts into the one I keep at home. I also use the one at home for expenses I know I won’t incur until later in the month so that I don’t have to carry as much cash. This allows me to make a conscious decision to decrease our spending, but gives me the security Dave Ramsey talks about. For example, I may budget $75 dollars per month for household expenses, but want to challenge myself to decrease this to $50. So, I put $50 into the main Household envelope and $25 into the reserve Household envelope. I know the money is there if I need it, but I challenge myself to stick to the $50. Most months I make it :)

• We really do spend more when we use credit versus cash. Don’t believe me? Check out this audio clip from NPR (the information about McDonald’s is particularly interesting), this article about a recent research study, or the original article entitled, in part, Monopoly Money.