Pour cereal into a large bowl. Set aside.

In a medium, microwave-safe bowl put the butterscotch chips, peanut butter, and butter. Cook on high for 1 minute.

Remove from microwave and stir until smooth. If the ingredients are lumpy, return bowl to microwave for another 15-30 seconds, then remove and stir.

Once smooth, stir in the vanilla.

Pour mixture over cereal and stir until cereal is well coated. At first it may not look as though there is not enough coating mixture, but there is plenty; just keep stirring.

Put the powdered sugar in a 2-gallon zipper-style plastic bag. If you don’t have a 2 gallon bag, then divide the powdered sugar and cereal mixture between two 1-gallon bags.Add the cereal mixture and shake the bag to coat the cereal. Store butterscotch buddies in plastic bag.