Principal Plan's Envelope Model

Overview

Principal Plan tracks every dollar from two angles. Accounts show where money physically lives -- which bank, wallet, or credit card. Envelopes show what the money is for -- the budget category assigned to each dollar. Every transaction is recorded in both systems at the same time, and the two must always agree.

This dual-tracking model lets envelope budgeting work alongside traditional account management.

Dual Balances

Every account and every envelope maintains two running balances:

Balance	Description
Balance	The total of all transactions assigned to this account or envelope.
Cleared	The total of transactions marked as cleared on that side. For accounts, this typically matches what the bank reports. For envelopes, it reflects items you have marked settled for that budget purpose (for example, reimbursed expenses).

The Balance column updates as transactions are created, edited, or deleted. The Cleared column updates as you clear transactions -- during bank reconciliation on the account side, or as you mark items settled on the envelope side.

Every Transaction Touches Both Sides

When you enter a transaction -- say a $50 grocery purchase -- you assign it to both an account (your checking account, where the $50 leaves) and an envelope (your groceries envelope, where the $50 is budgeted). The checking account balance and the groceries envelope balance both decrease by $50.

The result is:

• The sum of all account balances always equals the sum of all envelope balances.
• You can answer "how much money do I have at First National?" (account view) and "how much have I budgeted for groceries?" (envelope view) from the same data.

Independent Clearing

Each transaction carries two independent clearing states -- one for the account side and one for the envelope side. A transaction can be cleared in your account (your bank confirms it) without being cleared in your envelope, and vice versa.

Account clearing is for reconciling against bank or credit card statements. Mark transactions as they appear on the statement; the account cleared balance should match the statement ending balance. See Reconciling an Account.

Envelope clearing is optional bookkeeping by purpose. Use it when you want a cleared balance for a budget category that is not the same as "what the bank has posted." Classic examples are reimbursable medical or business expenses that may hit several accounts over time: leave those expenses uncleared in the envelope until they are reimbursed, then clear them when settlement arrives. The envelope cleared balance then shows what is still outstanding for that purpose, regardless of which account paid for each item.

This independence lets you reconcile your bank statement without affecting envelope tracking, and track reimbursements or other category-level settlement without changing account reconciliation.

Integrity

Principal Plan checks balance integrity every time a file is opened:

1. The total account balance must equal the total envelope balance.
2. Both stored balances must match a fresh calculation from all transaction records.
3. Every transaction must have both a valid account and a valid envelope assignment.

If any check fails, the file is reported as corrupt. These checks keep the dual-tracking model consistent, so money cannot appear in one view without being accounted for in the other.

Transfers

Transfers move money between accounts without affecting envelopes. When you transfer $500 from checking to savings, the checking balance decreases and the savings balance increases, but no envelope balance changes. The money was already allocated to its envelopes -- moving it between accounts does not change its purpose.

Envelope transfers work the other way: they move money between envelopes without affecting accounts. This lets you reallocate your budget without moving money between banks.

Hierarchy

Both accounts and envelopes support hierarchical organization. Accounts can be grouped into account groups (for example, grouping all retirement accounts together). Envelopes can be nested inside other envelopes (for example, a "Housing" parent with "Rent" and "Utilities" children). Parent nodes show the combined balance of all their descendants.