What is Envelope Budgeting?

Envelope budgeting (also called zero-based budgeting) is a method where you give every dollar a job. Instead of tracking what you spend after the fact, you decide ahead of time where your money will go.

The Core Idea

Imagine having physical envelopes for each spending category: Groceries, Rent, Entertainment, Savings. When you get paid, you divide the cash into these envelopes. When you need to buy groceries, you take money from the Groceries envelope. When it's empty, you either stop spending or move money from another envelope.

Why Every Dollar Should Be Allocated

  • Unallocated money tends to disappear into impulse purchases
  • Knowing exactly where your money goes reduces financial stress
  • You make intentional decisions about priorities before spending
  • It's easier to save when savings has a dedicated envelope

Balances Accumulate Over Time

Unlike traditional budgets that reset monthly, Keel tracks cumulative balances. If you allocate $400 to Groceries but only spend $350, that extra $50 stays in your Groceries line item. This is especially useful for irregular expenses (like annual insurance) and savings goals.

A Month in Keel: Walkthrough Example

Let's walk through a realistic monthly scenario to see envelope budgeting in action. The goal is to get your unallocated amount to zero, giving every dollar a purpose.

1

Receive your paycheck

You get paid $4,000. Record this as a deposit to your "Salary" line item under your Income category.

Income: $4,000 | Unallocated: $4,000
2

See the unallocated banner

Keel shows you have $4,000 unallocated. This isn't a surplus to celebrate. It's a problem to solve. Unallocated money has no purpose, and money without a purpose tends to disappear.

3

Allocate to essentials first

Start with your non-negotiable expenses. These are the bills you must pay.

Rent $1,500
Utilities $200
Insurance $150
Allocated: $1,850 | Unallocated: $2,150
4

Allocate to recurring expenses

Next, fund your regular monthly expenses. These are predictable costs you plan for.

Groceries $600
Gas $200
Subscriptions $50
Allocated: $2,700 | Unallocated: $1,300
5

Allocate to savings goals

Pay yourself before spending on wants. Savings is an expense like any other.

Emergency Fund $400
Vacation $200
Allocated: $3,300 | Unallocated: $700
6

Allocate to discretionary spending

Finally, allocate what's left to your "fun money" categories. This is guilt-free spending because you planned for it.

Entertainment $400
Dining Out $300
Allocated: $4,000 | Unallocated: $0
7

Every dollar has a job

Your unallocated amount is now $0. Every dollar from your paycheck has been assigned a purpose. You've made intentional decisions about your priorities before spending a single dollar.

Key Points to Remember

  • Allocating is a decision, not a prediction. You're choosing where money goes, not guessing what you'll spend.
  • Adjust as needed. If you overspend on groceries, transfer from dining out. Flexibility is built in.
  • Unallocated money disappears. Without a purpose, it gets absorbed by impulse purchases and forgotten subscriptions.
  • The goal is intentionality, not perfection. You'll adjust and learn. The power is in the process of deciding.

Key Concepts

Account

The top-level container for your budget. You might have a "Personal Budget" or "Family Budget". Accounts can be shared with family members who can view or help manage the budget.

Category

A group of related line items. Categories have a kind: either income (money coming in) or expense (money going out). Examples: "Income" (income kind), "Housing" (expense kind), "Savings" (expense kind).

Line Item

Your envelope. This is where you allocate money and track spending. Examples: "Groceries", "Electric Bill", "Vacation Fund", "Salary". Each line item belongs to a category and has a running balance.

Allocation

The amount you plan to spend from a line item this month. Set allocations at the start of the month when you receive income. You can adjust allocations anytime as plans change.

Balance

The cumulative amount in a line item. This is all allocations plus deposits, minus withdrawals, plus transfers in, minus transfers out — across all time, not just this month.

Transaction (Deposit / Withdrawal)

A record of money moving in or out. A deposit is money coming in (like a paycheck). A withdrawal is money going out (like a purchase). Transactions always have a vendor (who the money came from or went to).

Transfer

Moving money between line items within your budget. Unlike transactions, transfers don't affect your overall income or spending — they just reallocate funds. Use transfers when you overspend in one area and need to cover it from another.

Essential

A flag you can set on line items for fixed or non-discretionary expenses like rent, utilities, and insurance. This helps you understand your cost of living and prioritize during tight months.

Target

A savings goal for a line item. Set a target amount and timeframe, and Keel will suggest how much to allocate each month to reach your goal. Great for sinking funds like car maintenance or vacation savings.

Holding

A real bank account (checking, savings, etc.) that you use to store money. Holdings let you verify that your budget reflects reality by comparing expected balances with actual bank balances.

Monthly Summary Terms

Income
Total deposits to income-category line items
Allocated
Total planned spending for expense line items
Spent
Total withdrawals from expense line items
Unallocated
Income minus allocated (should be zero)

Using Keel

Summary Tab

The Summary tab gives you a high-level view of your finances over time. Here you'll find:

  • Bar chart showing Income, Spent, and Saved for each month
  • Date range selector to view different time periods
  • Totals cards summarizing the selected period

Use this to track trends and see how your saving rate changes month over month.

Budgets Tab

The Budgets tab is your main workspace for managing your monthly budget:

  • Month selector on the left to navigate between months
  • Line item list showing allocated amounts, spent, and balances
  • Unallocated banner appears when income exceeds allocations
  • Click any line item to expand and see recent entries

Income categories are collapsed by default since you typically interact with them less frequently.

Entries Tab

The Entries tab shows your complete ledger — all transactions and transfers:

  • Filter by line item, category, or month
  • Bulk delete multiple entries at once
  • Add transactions or transfers directly

This is useful for reviewing past spending or finding specific transactions. To export data, go to Account Settings > Export & Import.

Transfers

Transfers move money between line items without affecting income or spending totals:

  • Cover an overspent line item from one with surplus
  • Reallocate savings between goals
  • Balance your budget when plans change mid-month

Access transfers from the main navigation or from individual line items.

Holdings & Reconciliation

Holdings connect your budget to your real bank accounts. By assigning line items to holdings, you can verify that your budget balances match your actual bank balances.

Holdings Tab

The Holdings tab shows your real bank accounts and helps you reconcile with your budget:

  • Month selector on the left to navigate between months
  • Balance — click to enter your actual bank balance
  • Expected — what budget says bank should have at start of month
  • Variance — balance minus expected (positive = good, negative = problem)
  • Transfer — net funding needed since last reconciliation
  • Complete — checkbox to mark this month as reconciled

How Reconciliation Works

  1. Set up holdings in Account Settings and assign line items to each
  2. Each month, check your real bank balances and enter them in the Holdings tab
  3. Compare the Expected column to see if your budget matches reality
  4. If there's a variance, investigate — did you miss a transaction?
  5. The Transfer column shows how much to move between bank accounts
  6. Once balanced, check the Complete box to mark the month reconciled

The Transfer column accumulates from the last reconciled month. If you reconciled in October and are viewing December, it shows Nov + Dec combined.

Holdings Terms

Expected Balance
What budget says bank should have at start of month (based on last completed month)
Variance
Balance minus expected (positive = good, negative = problem)
Holdings Transfer
Net funding flow since last reconciliation
Reconciled
Month where you verified budget matches reality

How Do I...?

How do I record my paycheck?
  1. Go to the Budgets tab
  2. Find your income line item (e.g., "Salary") under an income category
  3. Click on the line item to expand it
  4. Click Add Entry or the + button
  5. Select Deposit as the type
  6. Enter the amount, date, and vendor (your employer)
  7. Save the transaction

Your income total will update, and you'll see the amount available to allocate.

How do I allocate money to a line item?
  1. Go to the Budgets tab
  2. Find the expense line item you want to fund
  3. Click on the Allocated amount (or the empty allocation field)
  4. Enter the amount you want to allocate this month
  5. Press Enter or click away to save

The unallocated amount will decrease as you assign money to line items. Aim to get unallocated to zero — every dollar should have a job.

How do I record a purchase?
  1. Go to the Budgets tab
  2. Find the line item for this expense (e.g., "Groceries")
  3. Click on the line item to expand it
  4. Click Add Entry or the + button
  5. Select Withdrawal as the type
  6. Enter the amount, date, and vendor (where you spent money)
  7. Save the transaction

The line item's balance and spent amount will update automatically.

How do I move money between line items?
  1. Click the Transfer button in the navigation (or from a line item)
  2. Select the From line item (where money is coming from)
  3. Select the To line item (where money is going)
  4. Enter the amount and date
  5. Optionally add a note explaining the transfer
  6. Save the transfer

Transfers don't affect your income or spent totals — they just move money within your budget.

How do I set up a savings goal (target)?
  1. Go to Account Settings from the user menu
  2. Find or create the line item for your goal
  3. Click Edit on the line item
  4. Set the Target amount (your goal)
  5. Set Target Months (how long to save)
  6. Save your changes

Keel will suggest how much to allocate each month. Your progress toward the goal will be shown on the Budgets tab.

How do I mark something as essential?
  1. Go to Account Settings from the user menu
  2. Find the line item you want to mark
  3. Click Edit on the line item
  4. Check the Essential checkbox
  5. Save your changes

Essential line items help you track your cost of living separately from discretionary spending. Mark things like rent, utilities, insurance, and minimum debt payments.

How do I invite someone to my account?
  1. Click on the user menu (your avatar in the top right)
  2. Select Invite Members
  3. Enter their email address
  4. Choose their role: Viewer (read-only) or Editor (can make changes)
  5. Send the invitation

They'll receive an email with a link to join your account. If they don't have a Keel account, they'll be prompted to create one.

How do I switch between accounts?
  1. Click the account dropdown in the top navigation (shows your current account name)
  2. Select another account from the Recent list
  3. Or click View All Accounts to see all accounts you have access to

You can be a member of multiple accounts with different roles. For example, you might own your personal budget and be a viewer on a family budget.

How do I reconcile my budget with my bank accounts?
  1. Go to Account Settings and set up your Holdings (bank accounts)
  2. Assign each line item to the holding where that money is stored
  3. Go to the Holdings tab in the main navigation
  4. Click on the Balance column and enter your actual bank balance
  5. Check the Variance column — it should be zero
  6. If there's a variance, look for missing transactions or errors
  7. Once balanced, check the Complete checkbox for that month

Reconcile monthly to catch discrepancies early. The Transfer column shows how much you need to move between bank accounts based on your allocations.

How do I backup or export my data?

There are two ways to export your data:

Export a single account (from Account Settings):

  1. Go to Account Settings from the user menu
  2. Click Export & Import in the sidebar
  3. Click Export Full Account (JSON) for a complete backup
  4. Or click Export Transactions Only (CSV) for spreadsheet use

Export all accounts (from Settings):

  1. Go to Settings from the user menu
  2. Click Data in the sidebar
  3. Click Export All to download all your accounts

JSON exports include all categories, line items, allocations, transactions, and transfers. They can be imported to restore your data or migrate to another device.

How do I import or restore my data?

Import accounts from JSON:

  1. Go to Settings from the user menu
  2. Click Data in the sidebar
  3. Under Import, select a JSON file exported from Keel
  4. Click Import Accounts

Import transactions from CSV:

  1. Go to Account Settings from the user menu
  2. Click Export & Import in the sidebar
  3. Click Import Transactions (CSV)
  4. Follow the wizard to map CSV columns to Keel fields

JSON imports create new accounts with all their data intact. CSV imports add transactions to an existing account.