For example, a family is planning a vacation in 3 months. However, there are also goals that do not require specific dollar amounts such as mailing all bills 6 days before their due date, helping a child open a savings account, reconciling a checking account with the bank statement every month, and clipping coupons to save on grocery bills. It is important to balance both types of goals so that a family's financial is well rounded. It may also include areas to enter information concerning credit cards, insurance, assets and liabilities, and any other type of financial account. The envelope method is a simple method in which each envelope represents a spending category.
Income is distributed into each envelope and purchases are taken from the proper envelope.
When the envelope is empty, spending in that category ends until the next pay day. Because each person or family has personal needs, there may not be a spending plan that fits all your needs. Once a family begins using a specific plan, they should alter it for their needs. For example, a family may start out using the envelope method but decide that instead of having such large amounts of cash available, they prefer to use the envelope for one or two categories and use an account book for the rest of the categories. After several months of utilizing the many types of spending plans, a family will create their own personalized spending plan.