Introduction

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Introducing Principal Plan

The Envelope Budgeting System

In the old days, before computers, online banking and credit cards, many folks used envelopes to help control their spending. Each time they got paid, they would allocate the money into envelopes each marked with a category like, groceries, clothes, church offering, etc.

When it came time to spend money, they would look inside their envelopes and know immediately how much they had to spend. When times were good, they might have enough to buy something extra and when times were tough, they stuck with the basics. In either case, this simple and reliable budgeting system kept track of how much money they had and enabled them to easily control their spending.

Not only was this system simple, it was very flexible. When one envelope was a little short, they could transfer cash from another envelope that had a little extra. They didn't have to remember how much they could spend on what, the envelopes always had the answer.

Same Old System, Brand New Technology

Like most personal financial software, Principal Plan allows you to manage your bank accounts using traditional ledgers that record individual transactions. You can track any kind of account: checking, savings, and even credit cards. You can sync with your bank by importing transactions online, or you can enter and edit transactions manually.

What makes Principal Plan different are the Envelopes. Every penny in the system is allocated to an envelope. When the system records money getting deposited into an account, the money is simultaneously allocated to one or more envelopes. When the system records money being spent, whether by check, credit card, or cash, the money is simultaneously deducted from one or more envelopes.

So, you might deposit $1000 in a checking account, allocating $500 of it to groceries, $200 to clothes and $300 to auto. When you go to the store and write a check for $200 worth of groceries, your checking account would be down to $800 and your groceries envelope would be down to $300. No need to remember how much you can spend on what. The Envelopes will always have the answer.

Allocating Income Is Easy

Using the old envelope system, it could be a bit of a pain to put the correct amount of money into the correct envelope. Big bills would have to be broken up. Principal Plan provides you with Transaction Templates, which are like reusable transaction blue-prints. With Templates, allocating money to envelopes is simple and quick. When income is recorded, all you have to do is select the appropriate Template and the software does the rest.

And Income Templates can be easily viewed side by side in the Allocation Plan, which allows you to see how all of your income is allocated over the course of the month (or any other time-frame). You might get paid twice a month and your spouse may get paid once. You could create Templates for each income source and view them side by side in the Allocation Plan.

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