It keeps up with your bank account so it shows how much you've credited your account everytime you're paid. So you fund your envelopes with that money. You can't fund more than you have. After you've funded your envelopes, it shows you how much money you have left over. Then for every transaction that shows up, you have to drag it to the corresponding folder and it deducts from what you already allocated.
It's pretty much the same as the physical envelope system. You put money in an envelope for a certain bill and you take it out as when you need it.
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