The envelope system is a tool to teach budgeting to your children.

Here is how it works:

• Decide what categories you will have. We used clothes, gifts, spending, saving, and tithe as our main categories.
• Decide an annual amount for each category.
• Divide each annual amount by twelve.
  Each month put the 1/12 amount in each envelope.

There are a few additional notes about this system that I would like to add:

• To come up with the tithe and saving amount, we added together all of the other envelope amounts, and took 10% of that amount for the tithe, and another 10% for saving.
• You can have as many envelopes, or categories, as you want. Each child is unique, and you may have different envelopes for different children.
• I would recommend having your child tithe first, then put money in some sort of savings account, and then take what is left over and put it into envelopes. This method will help teach your children Biblical priorities of money management.
• Explain to your children that when the money in each envelope is gone, there is no more money left for that month.

Ecclesiastes 7:11-12 (NKJV) 
“Wisdom is good with an inheritance, and profitable to those who see the sun. For wisdom is a defense as money is a defense, but the excellence of knowledge is that wisdom gives life to those who have it.”  

Proverbs 22:6 (NASB) 
“Train up a child in the way he should go; even when he is old he will not depart from it.”