It seems to me that most everybody gets an occasional chuckle from an article or report in a newspaper or magazine, but rarely does this amount to a real deep-seated belly laugh. Yet that’s what happened to us recently when we read a column by famed personal finance guru Clark Howard. (DDN 07/16/17). In this article he addressed the issue of budgeting and suggests what he calls, “… a real throwback to a different era – but it’s proving to still be very successful today.”
He goes on to say, “The strategy is pretty simple. Pay in cash for whatever you can, using envelopes to divvy up your money … . You simply take envelopes and write ‘groceries’ on one, ‘utilities’ on another ‘walking around money’ on a third. There should be a separate envelope for each part of your life that requires money.” This advice caused both of us to actually laugh out loud.
You see, when we were first married over 65 years ago, that’s exactly the technique we used to budget our very limited income. We purchased an accordion-style set of envelopes and annotated the various sections with “rent”, “groceries”, “clothing”, “church”, and even had a section labeled “savings” – which in reality turned out to be primarily an emergency fund for unexpected expenses. Back in those days folks like us got paid weekly, so each week we divvied our cash and put it into those envelopes. Sure, as time went on, we needed to make some adjustments with the amount in each envelope, but all in all it worked pretty well.
Guess you can understand why, when we came across Mr Howard’s budgeting advice, the notion that this renowned personal finance expert suggested using the same procedure we did well over half a century ago just broke us up.
In addition to the outright laughter this advice generated, there was another, gentler, nostalgic reaction. The rent for our three room “apartment”, including utilities, was $40 a month. (Actually, we had a kitchen, living room, and bedroom which were part of a old, large Victorian-style house – and we shared the bathroom with the widowed owner.) Regardless, each week we dutifully put $10 in the rent envelope as we did with the allocated sums in the others.
Now here comes the part that brought on the nostalgic smiles. Four times a year there was an “extra” payday – thirteen paydays each quarter but we needed only twelve to cover the rent. That meant we had $10 that was like “found” money – and designated that cash as our “eating out” money. Doesn’t sound like much these days, but back then $10 was more than sufficient for us to go out for one or more inexpensive meals or maybe movies, and possibly, an ice cream sundaes (with nuts on top). We truly looked forward to those budget-envelopes-enabled occasions – a kind of “date night” for a young married couple with very little money. You know, when we think of those times and how we somehow managed in spite of rather severe financial limitations, they truly hold a special place in our memory box and bring smiles to our faces.
We don’t use those accordion-style budget envelopes these days, but instead use a more modern version. Our retirement income is delivered electronically – no more weekly payday checks to cash. We continue the practice we started many years ago, however, of divvying up our money but much is now done by electronically allocating automatic payment for our electric bill, auto insurance, telephone, YMCA dues, and such. We use a computer program to keep track of each category of these expenses as well as those we cover by check but it’s the same basic principle as with the budget envelopes. Yep, old habits die hard.
There is one holdover from those early budgeting days. Twice a year our auto insurance company issues us a check as a distribution of some kind. I don’t really understand the details, but we get one check as a “regular” distribution and then a second for “geriatric generation” policy holders. Anyway, when these checks arrive, we cash them and put the money into a specially marked envelope. Care to guess what’s written on that envelope? You got it – “eating out” – and we use that cash the same way we did back then – for our “date nights.”
I suppose we owe Mr Howard thanks for two reasons. First, for providing us with a really good laugh and second, for validating our antiquated approach to personal finance. We may have been young, but it sure looks as if we weren’t foolish. At least that’s how it seems to me.