A general rule of thumb is to measure the distance between 12 rivets, a new chain will be right on the inch mark of a rule, a worn chain will stretch... replace the chain if its 1/16" or greater off, the cassette is OK... if the chain is 1/8" or greater replace both.
If you keep your chain clean and well-lubricated, you shouldn't need to do this often.
What RC2 says works fine. I bought a cheap CC-3 Park Chain Checker tool for $10. When it reads 0.75 I toss the chain and slap on a new one out of my stash. By tossing them a little on the early side it will ensure that my cassettes and chainrings stay in good form. That's what Lennord Zinn suggests so if it's good enough for him it's good enough for me.
Chains are an inexpensive commodity item these days so I don't see a reason to keep them around any longer than the 0.75 mark unless you've bought the Cadillac of chains. Not necessary for a Raleigh M20 commuter though.
Nothing will damage your drivetrain like a worn chain.
On my commuter I buy cheap chains KMC Z51 AUD $15.00. Put 3000ks on them then chuck them. If you buy a new chain and it slips in some gears your cassette is screwed. If you keep using the cassette it will wear the chain which will wear the chain rings. Having to replace the drive chain in one go is expenive. This is the way I do it other people may have other ideas. The chain checker appears a cheap and simple solution also.