How it works

On a regular basis a certain amount of money is set aside for a specific purpose in an envelope marked for that purpose.

Anytime you make a purchase you look in the envelope for the type of purchase being considered to see if there are sufficient funds to make the purchase.

If there is not enough then you have a few options:

• Do not make a purchase
• Wait until you can allocate more money to that envelope
• Sacrifice another category by moving money from its associated envelope