Your Grandparent's Budget

When I was traveling this fall, I spent some time with my brother, and we spent some time going through boxes of old books he has inherited from various family members.

I came across an amazing little...book cover.

The book title is "Budget Envelopes" and although it is not dated, it was mixed with other frugal-friendly books, like how to use the "cheap" cuts of meat to give your family protien even during the Depression, and other books dated from the 1930's to the 1950's.  So let's just say it reflects the budget of my great grandparents, when they were my age.

Aside from my utter amazement that my great grandmother was using the envelope system for budgeting long before the days of Dave Ramsey, Suze Orman, David Bach or the myriad of others (hmm, I wonder who the budget-guru of 1930 was?) was my interest in what envelopes were being used.

Luckily for me, although the envelopes have long been removed, the inside front cover has a complete list of "Suggested Budget Classifications"

I have heard and read people who talk about (whine? Make excuses?) that budgeting is harder now because we "need" so much more.  There were no cell phones, gaming systems, Ipods, personal computers, DVD players, cable television, GPS or all the music, movies and games we need to use those items.  Malls and restuarants were not as temptingly prevalent and the world was just a "different" place where you didn't "need" as much money.

I would challenge those people to identify one item they spend money on, that does not fit into the following categories, as listed on the book cover I found in my brother's garage:

1. FOOD:  Including beverages, lunch money, restaurants, etc.
2. CLOTHING:  Husband, Wife, Children
3. SHELTER: 
1. Rent, Mortgage Payments, Etc
2. Real Estate Taxes, Repairs & Improvements
3. Fuel:  Coal, Oil, Gas, Wood
4. Utilities: Telephone, Electricity, Water, Gas
5. Payments: Furniture, Appliances, Etc
4. AUTOMOBILE: Payments, Operation, Registration, Insurance, Taxes
5. MEDICAL: Doctor, Dentist, Hospital, Etc
6. INSURANCE: Life, Health, Accident, Fire, Insurance for Furniture & Home
7. EDUCATION: School Expense, Books, Magazines, Newspapers, Etc
8. DONATIONS: Church, Charitable, Personal Gifts for Birthdays, Christmas, Etc
9. ENTERTAINMENT & VACATION
10. SAVINGS:  Banks, Government Bonds, Stocks, Etc

We all need to find a system that works for us, and the envelope system may not be it.  I don't like using envelopes because I don't like using cash, but I take the idea and put it into my spreadsheets.  Others simply allow themselves a certain amount of money and know that one month that money might go mainly toward the doctor, or to car repairs, and another month might take the family to Disney.  The idea of envelopes makes those people feel too structured and limited.

But I think this small brush with the past is a pretty good reminder that the key is not to try to reinvent the wheel.  Not to try to come up with new and different categories or to stress yourself trying to peg every item you buy into it's own category.    The categories have been around longer than you or I and they will be the same when your grandchildren are struggling with their own household budgets.  (Afterall, if you think fuel is expensive NOW, imagine how much it will be to fuel those rockets they will all be driving in the future.)