I teach swimming 3 afternoons a week currently. There is a lot of cash that comes in from that and it would be very easy for me to just put it in my wallet and spend it the next time I wanted to go to McDonald's with the boys or found something cute at a store. Instead, when I walk in the house I pull out our Envelopes provided to us when we signed up for Financial Peace University, and I start filling them.
Currently we are using our envelopes for the following categories:
Blow Money (Individual Spending Money)
***Household this envelope was just added today. Our boys cold mist humidifier broke last night (it was my brother's who will turn 30 soon) We need a new one. We have money for it, but I realized today that it would be easier to have a "fund" set aside for things like this.
We do not use an envelope for gas money, although we do pay debit NOT credit for gas. We do this for a few reasons. 1) We have 2 little kids and don't want to leave them in the car all the time to pay for gas. 2) We have some pumps that are pay at the pump or pre-pay and we don't want to deal with that. 3) We don't want to be tempted to buy something more. :)
We have a prescriptions envelope because the way our insurance works we pay upfront for medicine and are reimbursed. I just cash the checks and put them back in the envelope for next month.
Envelopes like clothing and gifts are not used all the time. The goal is to not use cash from those envelopes unless it is for designated items. That way, when we hit wedding season (like now) or Christmas there should be a nice amount of cash available for purchases. Of course, there is always the on-line issue. Paying cash isn't always the cheapest way to go. But, this has a simple solution. Simple deposit the purchase amount into the bank, and you can purchase with a Visa debit card and have the same protection as if it was a credit card.
Do you use the envelope system? What other categories do you use?