I think each person has their own reasons for devising their own envelope system. My household expenses are pretty much the same each month…mortgage, utilities, phone, groceries for myself and my pets, &c. So, I rely on my regular sources of income to pay for these…my paycheck from the bindery where I work, my roommates’ rent, money from teaching and taking commissions and/or selling my work. When I say these are regular sources of income I mean they come in each month, but not always in the same amounts.To cover the fluctuations in income, I keep a very healthy reserve in both my personal and business checking accounts.

I am old fashioned and out of date because I pay for everything with either cash or by check. I use my credit cards only for travel purposes or buying books on-line.

Where does the envelope system fit? It pays for the extras I don’t have in my budget. For example, I have someone who cleans my house every other week. And I have a gardener who comes every few months. And, I want to make a major purchase of a new laptop and inkjet printer. Each of these gets their own envelope and the envelopes get fatter as time goes by.

You do have to be disciplined in that you don’t make unexpected stops or trips…because you have to plan to leave the house with that certain money…and the left overs go back in the envie when you get home.

If we forget the money…we are out of luck. Trust me…it will only happen once or twice and the inconvience of forgetting will help you double check yourself. And not just having the cash on you stops all kinds of little trips where you end up spending uselessly.

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I’ve thought many times about utilizing the envelope system but never have. Hubby and I each get ‘weekly allowance’ money to spend as we wish, regular bills, groceries and gas are paid with the checkbook. I’ve gotten good at sticking w/in limits for groceries so I don’t feel like I need to have cash to keep me on track in that dept. Our oldest daughter, now 16, has a part-time job and also does baby-sitting. She started using the envelope system about 5 months ago and has stuck with it consistently. I’m so proud of her. I have a tin in my kitchen where I set aside money each month for some future purpose; right now it’s collecting for back-to-school expenses in August.

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And so what if I did get mugged or lose the cash? It’s only money – it can be replaced eventually.

If I am going out of town to Costco or Grocery Outlet for a ‘stock-up” run, I will usually have an extra $200 along – cash, of course. Keeps me from overspending as I know I can only spend the cash I have on hand. I don’t worry about coffee shops or eating out – I’m just too frugal to do either one.