We just started using the envelope system for budgeting and at the beginning of the month put our budgeted amount for "household consumables" (i.e., food for people and animals, cleaning products, non-prescription medicinces, etc.) in the envelope. At about halfway through the month it looks like we'll have a bit leftover by the end.
What's the procedure here? Do we:
1) Lower next month's amount by the amount that's left over, going lower and lower until we find the amount that's the bare minimum? (The "use it or loose it" method.)
2) Remove the surplus to a "surplus envelope" and keep the original budgeted amount for the next month, allowing us to accumulate any monthly surpluses to use when we reach a month where things do not go as smoothly so we'll have cash to handle them and the standard monthly budget doesn't change.
3) Keep the surplus in the envelope and add the original budgeted amount, thereby increasing the next month's available budget, but reverting to the original budget once/if surplusses are used.