When all the budgeted money from a current month has not been spent, it should be reallocated to work your current Baby Step or carried over to the next budget month.
As an example, let's say you have $25 left over at the end of the month. Here are some ideas based on your current Baby Step:
- Baby Step 1, reallocate your "Planned" amounts to put the leftover $25 toward your $1,000 starter Emergency Fund.
- Baby Step 2, reallocate your "Planned" amounts to apply the $25 as an extra payment toward the debt that has the lowest balance.
- Baby Step 3, reallocate your "Planned" amounts to add the $25 to your savings goal for a fully funded Emergency Fund.
When reallocating, every dollar needs to be accounted for in the budget. For example, the "Planned" amount for a budget item can be adjusted down to what was actually spent. Then, take that extra money and increase the planned amount somewhere else (including debt). You want your budget to balance down to zero. is what we're looking for! (Quick callout: That doesn't mean your bank account reaches zero.)
To carry the remaining amount into next month's budget, you may consider adding up the amount and creating a new line item (in next month's budget) called "Rollover". This allows those extra dollars to be freed and budgeted for other expenses or goals such as saving for a car or paying off debt.
Finally, we have a function called Funds which allows for carryover balances to carry automatically and helps folks save up for expenses that may occur every once in a while (i.e. quarterly, annually, semi-annually, etc.).