How to Become a Millionaire, One Envelope at a Time

Joe and I made a deal two months ago that I would try out the envelope system if he would write about it for this month's Marriage & Money post. I think he secretly really loves writing things for the blog, but he's still turning down my offer to fit him into the schedule once every month. And because I like to chime in and defend myself in his posts, you'll find my two cents in italics!

The Envelope System

Marriage is never about equal rights. In our marriage I don't get to write a honey-do list and I don't get to choose what chores I "want" to do. I do the ones that Amberly hates doing. (True story and it works out nicely.) Don't worry, that isn't too much, I only do the dishes, laundry, clean the bathroom and the bedroom and vacuum. She likes wiping off the counters and dusting. (Ahem, I clean the kitchen, make the meals, do half of the laundry, declutter, dust, etc.) I definitely do not do any of the grocery shopping and I am thankful for that. Amberly has become pretty good at using coupons and saving money at the store and I love it, but there is something that we don't see eye to eye on. She can save $20 or more on things that we "need" and because of those savings, she feels that it isn't a problem to go buy a shirt or a dress, since we shop at Target it's easy to do, but she views it as "basically free". (Again, true story, Kohl's is an even better place for shopping justification.) She is a spender, I am a saver, and this can be a big problem, I mean, money is the number one reason for divorce in this country.

In the pretend world I live in, if I were to go grocery shopping and save $20, I would go home with my $20 and a huge smile on my face. I would open Excel and start a compound interest form to see that if I save $20 a week and invest it into a good growth mutual fund every week of my life, by the time I was 65, that would turn into $1,181,241.10. So as you can see, I'm a little bit more of a nerd than Amberly. (He will seriously text me randomly to tell me how if we invested such and such amount we could be so rich by the time we're 60. It's his favorite hobby, calculating money. It cracks me up.) My nerdiness could cause problems in our marriage, so I decided that I wanted to start using the envelope system!

I introduced this concept to Amberly not only because in my eyes, I saw her spending literally millions of dollars on clothing but because I started feeling very agitated every time she bought clothes and her saying it was only $8 didn't help me. By the way, $8 a month, invested for 40 years is about $95k. I could wear clothing for years and years, but sometimes I have to break down and buy something new and I hate it, but I felt I couldn't because Amberly was off spending "all" the money we had, when in reality, it was only a small, acceptable percentage of our income. (I can't tell you how many months it took me to convince him to just buy new socks. Every pair he owned had holes in the heel and he's super picky, so I couldn't pick some out for him.)

Whenever I've mentioned the envelope system in the past to Amberly, she would get defensive and annoyed that I would even think of doing such an awful thing.

But I was getting really fed up with not having any money. We had become debt free and then we must have started living like royalty or something, because all of that extra money we were supposed to be saving wasn't appearing in our account. So I put my foot down, pushed some boundaries and entered Amberly into my own category of "Honey-do Lists". I didn't want to go full on Dave Ramsey Envelope system, where I pull cash out to buy groceries, this was only going to start for our problem spending areas, the big one being restaurants! The month before starting the envelope system I was looking on Mint.com at an overview of the past month and where we had sent our money. I was shocked to find that we had spent over $500 at restaurants. (Sometimes I don't really want to cook....) Just to be consistent, if I put that money into an investment every month, over 40 years, that would be almost 6 million dollars.

Once I got Amberly on board, after telling her she could choose how much went into the envelopes we got started (And promising to write this guest post of course.) The envelopes we have are:

  • Clothing, Joe/Amberly
  • Blow Money, Joe/Amberly
  • Restaurants
  • Vacation
  • Presents/Christmas
  • Dog
  • Blog (Yay for the blog having money!)

Just like marriage isn't equal, neither are the amounts we get. I for one only get $20 for clothing a month. It will take a while to save up for shoes, but I am ok with that. (He has patience, I don't...) Now when Amberly buys clothes, I don't care because she has her cash that she can spend on it and we agreed on the amount. We have been using this system for two months and we can finally see the effects it has had on our savings account. It is slowly growing and I finally get the satisfaction of watching our net worth go up! (Remember the awesome Net Worth & Debt post he wrote a couple of months ago?)

The envelope system has quite the effect because spending on a debit card is just a little sting for me, but having to break a $20 for a hamburger really destroys something deep inside. For my wife, it has kept her frustrated and feeling broke, but I let her decide how much she got to put in each envelope and we all know deep down inside she loves it with all her heart! (Grumble, grumble, grumble...)

Our Envelope System

I think my favorite thing about the envelope system happened within the first week of starting this. Joe went out and bought himself two or three new pairs of pants and four new shirts.  They were things he really needed but wouldn't justify spending money on before that. One of our other envelopes that the husband didn't mention is the "to deposit" envelope. This is for times that we might have to pay for something with our debit card and need to pay ourselves back. I think once I get used to it more, I will really love the envelope system,but right now it's still a little difficult for me.

Marriage & Money

Do you use the envelope system? How has it worked out for you?