> ## Documentation Index
> Fetch the complete documentation index at: https://docs.kualia.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Envelope Budgeting

> Understand the budgeting method that powers Kualia

## What is Envelope Budgeting?

Envelope budgeting is a method where you divide your income into categories (envelopes) and allocate a specific amount to each one. When you spend money, it comes out of the relevant envelope. When an envelope is empty, you stop spending in that category or move money from another envelope.

{/* <img src="/images/envelope-concept.png" alt="Envelope Budgeting Concept" /> */}

## The Core Principles

### 1. Give Every Dollar a Job

When money comes in, you assign it to categories. Your **Ready to Assign** balance shows money that hasn't been assigned yet. The goal is to get this to zero - not by spending it, but by putting it into envelopes.

### 2. Embrace Your True Expenses

Some expenses don't happen monthly. Annual subscriptions, car insurance, holiday gifts - set up categories for these and fund them a little each month so you're ready when the bill comes.

### 3. Roll With the Punches

Overspent on dining out? Move money from another category to cover it. Your budget is a living plan, not a rigid set of rules.

### 4. Age Your Money

Over time, you'll start spending money you earned last month (or earlier) rather than money that just came in. This buffer means you're no longer living paycheck to paycheck.

## How It Works in Kualia

### Category Groups & Categories

Your budget is organized into **category groups** that contain individual **categories**:

| Category Group | Categories                    |
| -------------- | ----------------------------- |
| Housing        | Rent, Utilities, Insurance    |
| Food           | Groceries, Dining Out         |
| Transportation | Gas, Car Payment, Maintenance |
| Savings        | Emergency Fund, Vacation      |

{/* <img src="/images/envelope-budget-view.png" alt="Budget View" /> */}

### The Budget View

The budget view is where you manage your envelopes each month. For each category you'll see:

* **Assigned** - how much you've put into this envelope this month
* **Activity** - spending and income in this category
* **Available** - what's left to spend

{/* <img src="/images/envelope-columns.png" alt="Budget Columns" /> */}

### Ready to Assign

The **Ready to Assign** amount at the top of your budget represents unassigned money. This includes:

* Income that hasn't been assigned to categories
* Money moved back from categories

Your goal each month is to bring Ready to Assign to **\$0.00** by distributing it across your categories.

{/* <img src="/images/envelope-ready-to-assign.png" alt="Ready to Assign" /> */}

### Credit Card Handling

Kualia has special handling for credit cards. When you spend on a credit card:

1. The spending category's available balance decreases
2. The credit card payment category tracks what you owe
3. When you make a payment, it reduces the credit card balance

This means your budget always reflects reality - credit card spending reduces your envelope balances immediately, not when you pay the bill.

{/* <img src="/images/envelope-credit-cards.png" alt="Credit Card Flow" /> */}

## Getting Started with Envelope Budgeting

<Steps>
  <Step title="List your expenses">Write down everything you spend money on. Group similar expenses together.</Step>

  <Step title="Create your categories">
    Set up category groups and categories in Kualia matching your expense list.
  </Step>

  <Step title="Assign your current money">
    Look at your bank balance and assign it to your most important categories first.
  </Step>

  <Step title="Track your spending">
    Enter transactions or connect your bank. Watch your available balances change.
  </Step>

  <Step title="Adjust as needed">
    Move money between categories as real life happens. Refine your budget each month.
  </Step>
</Steps>