A simple illustration of the envelope model is how your grandparents may have maintained a budget before checking accounts were commonly used. They cashed their paycheck and distributed their money into real paper envelopes marked with the name of the bill or expense, i.e., electricity, food, rent, etc. When a bill came due, the money was in the envelope to pay for it. It was a simple but effective way of ensuring that bills were paid and that they lived within their means.

Now that mostly everyone has a bank account it is easy to lose sight of how much you can afford to spend. Do you know if you have enough in your account to pay your bills? Do you find out too late that you spent more than you could afford? How about when the semi-annual insurance bill comes due — do you have the money to pay it? With Budget you can set aside money in your account(s) into virtual envelopes for all your expenses.

How Budget Uses Envelopes

With Budget, the main focus is on your envelopes. You will create virtual envelopes for your expense categories and distribute your bank account money into those envelopes. When the mortgage bill needs to be paid, you will write the check from the "Mortgage" envelope. If you receive a claim reimbursement from your health insurance, you can make a deposit into the "Medical" envelope. When you get paid, you will distribute the money to your envelopes to fill them up again.

Your envelopes and their balances are always displayed on the main screen, so you will know at a glance if you have enough money to pay the bills — it's a lot easier than opening up real envelopes to see what's inside! You can even look at an envelope's history to see all prior transactions. It's like having a checkbook for each envelope!

Budget is also an account manager. You can manage your real world checking or savings account at the same time as you're managing your budget. Record transactions, print checks, view your checkbook register (account history in Budget terminology), and reconcile your account each month using Budget. You can even track your credit card accounts or other loans.

The real power of Budget is the ability to set up your budget plan in advance and preallocate future income deposits directly to your envelopes when you get paid. You'll find it easy to stick to your budget when you pay your budget first.

Budget is Powerful or Simple - You Decide

You don't have to use all the features of Budget to use the program. For example, you can simply track your expense money without tying it to your real world account — kind of like just replacing those physical envelopes you may be using. Or you can distribute your pay deposits manually to your envelopes without setting up pay allocations.

Parents, Budget can even be used by your child to manage their allowance or your teen to manage their part-time job income and expenses.