To download a printable version of this transcript, click here.
 
 
iQuestions Faculty, Ron Blue 
 
 
Question: 
 
What is the envelope system? 
 
Answer: 
 
JUDY BLUE: The envelope system is a great tool and a great friend to 
both parents and children. We used it when our children were growing 
up—with five children, obviously there can be a lot of conflict over 
money. How much can I spend on this outfit? How much can I spend 
to buy so-and-so’s birthday present?  
 
In scripture, it says, “There are three things, yea, four, that never say 
‘enough.’” (Proverbs 30:15) And, children don’t ever say “enough” 
either, but it’s not on that list in Proverbs. So, they always want more, 
bigger and better. 
 
So, the envelope system is a training system that is so freeing to both 
parents and children. Basically, you have five envelopes: Spending, 
saving, clothes, tithing, and gifts—and the gifts are for people in the 
family for Christmas and birthdays, and it also included little gifts for 
their birthday parties that they got to attend. Clothes were the clothes 
that they cared about.  
 
I think that’s really important to understand. Our youngest was five 
when we started him on the envelope system. At that point in his life 
he did not care about underwear, so he was not responsible for his 
underwear. Church shoes and church clothes maybe never would have 
gotten on anybody’s list.  
 
 
 
So, what you make them responsible for in their particular envelope 
are things that they will take ownership of. And then when you go 
shopping they take their envelope with them, and they get to decide 
how they’re going to spend that money. It’s a fascinating study in your 
children’s personality. Some of them can’t wait to spend everything in 
there. Some of them want to keep everything that’s in there. But 
that’s okay! Ultimately, what you’re trying to do is teach them that 
when the envelope is empty, they’re done spending.  
 
It’s so interesting to see the difference in their perspective when it’s 
money, even though it’s your money in their envelope, how much 
more careful they are in looking at price tags. 
 
RON BLUE: Do you mean Tim and Michael spent money differently? 
 
JUDY: Yes, they did! It was so fascinating. You’d take them to the 
store and one of our sons would rather have had two Polo shirts and 
only have two shirts. And another son who would rather go to Wal-
Mart or Target and have as many shirts as his hundred dollars would 
buy. 
 
There’s freedom, there’s so much freedom, for the child and for you. If 
the one who chose polo shirts had been spending out of my pocket, I 
would not have let him do that. But because it was out of his pocket, 
and there was a consequence for that choice, but he was okay with the 
consequence, then it was very freeing. 
 
RON: I think it’s important for people to understand that the money 
that went into the envelope was money that we would have spent 
anyway. We had a budget for our kids’ clothes, and we decided that 
we were going to let them make the decision. So, they helped us set 
the budget, but then we put it in the envelope, and it wasn’t just their 
manipulation that got the amount. This was something we were going 
Page -2- 
 
 
to spend. So, what we did as a principle, we said we’re going to give 
them the responsibility to spend that part of our budget. 
 
I think there another thing that’s important to know, and that is that 
you’ve been doing most of the talking on the envelope system—and 
that’s with good reason, and that’s that you worked with it every day. 
I worked with it a little bit, but I didn’t work with it like you did. You 
had real commitment to doing it. You were the one that took them to 
the mall and did the shopping, and so forth. We set up the system and 
agreed on all the amounts. But as the mom, you were the one who 
was the primary one committed to it.  
 
JUDY: I want to encourage everybody to use the envelope system. Our 
kids’ friends used to go home to their moms and say, “I want to do 
what the Blues are doing.” Because, ultimately it’s a very empowering 
system. Yes, it takes some management. Yes, you have to go to the 
bank and get the cash. You have to be careful that your children are 
respectful and careful about where they put their money.  
 
But, the end result is so much freedom. We never had conflict with our 
children about money. 
 
RON: That’s a phenomenal statement! I was speaking one time and in 
the audience was a group of very wealthy people. There was a couple 
there that both of their parents were billionaires, and they had 
married. Their question was, how do you ever teach your children that 
there’s a limit? Especially in their situation, where there effectively was 
no limit.  
 
We talked about the envelope system, and you know, when the 
envelope’s empty, the spending is done. What an incredible thing to 
teach your child. This couple raised all their children on the envelope 
system. They had billions of dollars and they raised their kids on the 
envelope system, because it taught them that there’s a limit.  
Page -3- 
 
 
 
I think the other thing it taught them was regular giving. 
 
Our kids, we required them, as a part of this system that they brought 
the envelope to church, or they took the money out of the envelope, 
the giving envelope. We taught them about saving. They could save 
for a tennis racket, a bicycle or something. In other words, it was okay 
to spend the saving envelope, which is right. 
 
The book, Your Kids Can Master Their Money Too, which was published 
by Focus on the Family, describes this whole money management 
system that Judy and I have been talking about. 
Page -4- 
To download a printable version of this transcript, click here.