Simplifying works. Today, I'll break down my ridiculously simple, easy, and practical personal budgeting system that single-handedly got us out of major debt and helped us get ahead financially. The best part? It's worked for thousands of people, too!

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Several years ago I sat down at my kitchen desk, turned on my computer's (horrible quality front-facing) camera, and recorded (on impulse) my simple budgeting system method; how I track my weekly budget using an envelope. Little did I know that this simple budgeting system method and terrible video would be one of my most viral principles ever!

It's long overdue, but I finally sat down and made an updated version of the video, with new tips and – you're welcome Video Land – a much better quality camera.

*Note: When you click the links in this post, we may receive a commission at no extra cost to you.

Then, after you watch the video, come back for a few additional tips and clarifications.

Watch the video online or click and watch below:

See?? Not so scary!

Budgeting can be complicated. Frustrating. Hard, even. When my husband I went through our tough financial time we learned one glaring fact about budgeting.


As a frugal living expert and financial disaster survivor, I've learned the secret to budgeting that actually works – simplifying.

The simpler you make it, then the more realistic it is to implement into your life permanently. I am not a fan of crash diets, just as I am not a fan of crash budgets.

Today I'm going to give you an in-depth look inside the simplest technique ever. It has not only single-handedly helped us get out of major debt (more than $10,000 on just one credit card), but it has helped thousands of people stop getting by and start getting ahead.

This simple budgeting system works whether you use cash, debit cards, or credit cards to do your spending. Ready for the secret sauce? Let me start by explaining why this works so well for us.

When we first cracked down on budgeting, I tried everything.

  • Monthly budgets – but getting a lump of money is hard for me to not blow through quickly. Anybody else struggle with that?
  • Multiple budgets – unfortunately, it was confusing and hard to track, especially if I needed one budget one month and not the next, like haircuts or vet visits.
  • Using cash – it was hard to track so I would have no idea where it had all gone at the end of the month.
I tried so many budgeting systems, but none of them worked. Ultimately I had to create my own to manage my money! Check it out on Fun Cheap or Free

Nothing was working for me long-term, so I wised up and created my own system. A girl's gotta do what a girl's gotta do! Now I:

  • Break my budget down weekly.
  • Have only 3 budgets that encompass all our regular spending (grocery, other, and family – more on that below).
  • Use credit cards to track all transactions and pay all bills (see other reasons why HERE, and see how we chose our cards HERE)

Simplifying our budgets has – literally – changed our financial lives!

Here are the tricks to being able to maintain a practical and balanced budget for the rest of your life:

  1. Divide up your spending and simplify your individual budgets. No more “hair cut budgets,” “eating out budgets” or “dog grooming budgets.” I suggest you lump your spending into two categories and simplify…
  2. Break your budget down weekly instead of monthly. Like I mentioned, it's hard to make a lump sum last 4 weeks, you're likely to run out. One week at a time is much more manageable.
  3. Keep track in a simple envelope.


So now let's break down my 3 budgets to give you the BIG picture.


Anything you could find at a neighborhood grocery store. We're not talking Costco or super Walmart. We're talking a Neighborhood Walmart, Smiths, and Safeway-type stores. They don't have power drills and sheets for your bed, but they have most of the basic items you might need to buy on a day to day basis.

Examples of grocery budget items: Food, shampoo, dog food, lotion, baby wipes/diapers, shaving cream, ziplock baggies, basic kitchen utensils & baking items, cleaning supplies, milk, basic cold remedy medicine, makeup and other toiletries, etc.


Money set aside for normal, regular, non-grocery expenses. These are “want to have” items most of the time, and not “need to have” items. Once again, this does NOT include any form of bill or utility, see the next category for that. See below for more explanation.

Examples of other budget items: Home decor needs, clothing, haircuts, babysitting money, piano lessons, getting the car cleaned, school pictures, lunch with friends, spa treatments, shoe repair, gifts for birthdays/showers, etc.

So where do bills, utilities, and gasoline come from? In our house, money for that comes from our family budget.


Expected, set monthly expenses involving the family, house, and travel, as well as unexpected expenses involving the family. These are the “need to have” expenses that keeps the family running, and are NOT food-related.

Examples of family budget items: Utilities (gas, electric, cable, internet), medical expenses (co-pays, medical bills, insurance), car expenses (gas, repairs, new tires, registering the car, oil changes), home costs (mortgage payment, homeowners insurance, home repairs, new water heater, new furniture, TV, or other large household expenses, etc.), family entertainment (travel, trips), etc.


Click HERE for parameters on how much you should spend on groceries. Click HERE for a full tutorial on how I save 1/2 on my groceries every month without clipping a single coupon.

For your OTHER budget, here is how we decided how big that should be:

  1. Pull out your detailed statements from the last 3 months that show every dime you've spent (spreadsheet, credit card statement, or whatever you use to track your spending).
  2. Decide what will be covered in YOUR “other” budget.
  3. Total up how much you spent on “other” in the first month, then second, then third.
  4. Average them out (add the sum of the 3 months then divide by 3).
  5. There's your STARTING point.
  6. Now… cut it in half 🙂 If half seems too harsh, cut it down and start there. Make it hurt a little, it's almost guaranteed you are spending more than you should because, well, that's human nature!


As explained in the video, an envelope is the single most effective way I've ever tried. You can make your own envelope like I did in the video, or you can download our free envelope printables.

Simplest budgeting method, plus free printables from Fun Cheap or Free

Check out how awesome these envelope printables look in action!!

Remember, the point is that you stay WITHIN your weekly budget. However, life happens. So if you happen to go over budget, remember – NO BORROWING BELOW THE LINE! Feel free to borrow side-to-side.

Track your budget the easy way - Ideas from Fun Cheap or Free

Use leftover money wisely. The point is to try to stay below budget each week. If it's the end of the week and you have money left in your budget try not to look for a way to spend it. Rather, put it toward any debt, or if you're debt-free other than a house or car, put it in your SLUSH FUND or savings accounts.


Trust me, it's much simpler than it looks on paper (that's why watching the video is just plain easier). Making these simple changes transformed our financial lives and has allowed us to get out of a very scary situation… and get ahead! Adapt the system to fit you and your family. And remember, if we can do it, you can do it 🙂 This budgeting system can work for anybody!


  • If you prefer a more “techy” approach to tracking, then you're like my husband. He would rather shave his eyelids than carry around an envelope. He uses to track his responsibilities because it's digital, has a fabulous free app, and connects with every loan, bank account, credit/debit card we have. Plus, he can also set and track financial goals. I recommend doing both because Mint is more comprehensive… but it didn't work for me in terms of keeping track of day to day spending.
  • If you have a long month – one with 5 weeks, you can either make the first or last week of the month longer to include the extra days, or simply divide your budget by 5 and keep all your weeks as 7-day weeks. Just do what works best for you. In our free printables we divided everything by 4 weeks to keep it uniform and simple.
  • Try cutting your budget down a little to begin with. You probably spend money on little things that you don't need to be spending. Cutting back could really help your family reach your goals if you put it in your slush fund and put it toward BIG, long-term things.
A budgeting system that will change your life from Fun Cheap or Free
  • Keep EVERY receipt for the month in your envelope, so if you lose track or need to return something you have everything right there.
  • If you bring home extra money in a month – bonus, extra commissions, extra paycheck that month, etc. DON'T alter your budget! There is absolutely no need! Put the extra money toward debt, put it in your savings, or put it in your slush fund. Don't go out and buy more groceries with it, that is noooooo fun. Be wise with every dollar you bring in.
  • You need to get creative with how you spend money on groceries. Click HERE for a full tutorial on how I save 1/2 every month without clipping a single coupon. Additionally, click HERE for lots of cheap meal ideas, how to not waste food, and more.

Here are a few additional tips to make this method work even better for you:


Yes, seven. “Whaaaaat?! Hold the phone! Put on the breaks! Sound the alarm!…SEVEN accounts? Giiirl, yo' mus be ca-RAY-zay!” Ok, maybe I am. But I will promise you something, by opening multiple accounts, it WILL make your life easier as it helps you organize and simplify your money more than you can imagine. Click HERE for all the details, how-to, why's, and info on why setting up 7 bank accounts will change your life.


No reason to step on each others' toes! Divide and conquer! Sit down and write out everything you spend money on, then divide it up.

You should buy the groceries if you do the cooking. You should be in charge of paying school fees if you usually drive the kids around. If you are the one that knows about cars, then you should be the one to handle oil changes and car repairs.

Dividing things up this way will keep you efficient, organized, and give you autonomy to do things your own way! Check out more details about how to divide up your financial responsibilities… responsibly.

If you don't want to hand-write each of your envelopes, then be sure to download our free printables!

Use the smartest budgeting system out there and change your life from Fun Cheap or Free

Good luck with your new budgeting system!

Grab some envelopes from The Page Company to to help out with your budgeting system! Ideas from Fun Cheap or Free

If you want some oh-so-pretty-and-fancy envelopes, then we've got you covered! Head on over to The Page Company, snag you some, take a little look around while you're there, and get to using them already!

The easiest, simplest, and most effective way to budget EVER! from Fun Cheap or Free

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Need a little more help?

Don't forget about my Secret Sauce online budgeting program, Budget Boot Camp! BBC is a super fun 27-video program that makes money easy to understand. All you need is a screen and you're set!

And don't forget, if you don't save at LEAST what you paid for the program, I'll refund every dime. You've got nothing to lose (except your debt)! Use the code FCFBLOG to get an extra 10% off, because I love you 😉

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