Week Three: 

Goal: To understand where last week’s money went and to spend from the right envelope.

1. Review Last Week’s Expenses.  Go through the envelopes and figure out how much you spent and if your estimates were close.  If you had an envelope you didn’t use but will use this week, just leave the envelope intact.
2. Leftover cash.  If you have leftover cash, do a happy dance.  Most people don’t the first week!  Take out all the leftover cash from their envelopes and add it up. Put it to one side.
3. Recalculate how much you need for the coming week.   Imagine you had $50 leftover from last week and need $500 this week.  Plan to take out $450 this week.  Use the leftover cash to make up the difference.
4. Fill the envelopes.  Go to the bank and get the cash.

This week should go a bit easier.  You might find yourself looking more closely at prices as you buy stuff.  You might still find yourself borrowing from the other envelopes, but try not to.  If you do, it is ok.  You are still learning.  The ultimate goal, though, is to not borrow from any other envelope.

Peter and I put $100 in an envelope marked: Buffer.  This was the envelope we would borrow from rather than stealing from other envelopes.  We kept track of what we borrowed for. The buffer helped us emotionally because we could see that we had succeeded with most of the envelopes and this felt good. When only one or two categories are  a problem, it is easier to find solutions and feel positive. We also agreed that this was our safety net while we learned.  Eventually, the buffer envelope would disappear as we got better at planning and managing our envelopes.