The envelope system is a very basic tool that you can use to teach your kids to manage money. To implement the envelope system all you need to do is get some envelopes and label them with a purpose (i.e. Spend, Save, Tithe, Clothes, etc.). You then allocate the allowance that you give your kids or the money that they earn into these various envelopes. At the beginning, it is best to help your kids allocate the money they get along certain set percentages. After they get used to using the system, you may consider letting them allocate it as they deem best.

Sometimes, the envelope system needs to be tweaked to suit the needs of a child’s personality. We had one daughter who was just not comfortable with a “spend” envelope alone.  She wanted money that had absolutely no assigned purpose whatsoever, so that she could feel free to “blow” it on anything.  She’s our free spirit. Well, after going around with her about it a few times, Judy and I came up with a “flit” envelope for her. All we did was move some of her spending money into the new envelope, and she was pleased that she had more freedom. Judy knew the frustration that our daughter was feeling.  I didn’t quite get it because it was not rational to me, and because I wasn’t dealing with it on a regular basis.  That situation was a great opportunity for me to show grace to my daughter and to Judy rather than inserting my own linear personality into the picture in a way that would have frustrated them both.

Not only is the envelope system a great way to teach kids how to manage their money, it can also be a great tool in your marriage to open the doors of communication about how you prioritize your budget “envelopes.”  Many couples have conflict over money issues, and I have found that the conflict often comes from the different male / female “wiring” more than it does from actual differences in value systems between the husband and wife.  As you work out the envelope system for your children, you may find that you see the other person’s heart about money more clearly.  That new understanding of your spouse may just improve your communication about your family budget, too. Additionally, as you implement the system in your home, I’d like to encourage you to love your spouse with grace and truth, just as Jesus loves us. 

Just as with all parenting, the envelope system works best when both of you are involved in teaching it to your children.  When your 13 year old just can’t imagine why your wife won’t let her spend her gifts money on her clothing that month, support your wife by reiterating the principles and the values that the envelope system teaches.  Work together with your spouse so that you are communicating the same messages to your kids.  If you do that, your children will benefit so much from your consistency.

The envelope system was one of the greatest places of growth and unity for Judy and me in our time of raising children together.  I pray that it functions in your children’s lives to teach them God’s principles of finances, and I pray that it functions in your marriage as a place where you can honor and learn from each other.

May God’s peace encourage you as you pursue financial wisdom and depend on His Truth.