- Does Leftover Money Carry Over to the Next Month?

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So, it's the end of the month, and you planned $500 for your grocery budget but only spent $475! Maybe you found some great sales or clipped coupons. Now, you’re wondering, What do I do with the leftover money?

Everyone who has ever done a budget has found themselves in this situation: Your planned amounts don't always equal what you spend. Here's how we suggest you handle it.

The best thing to do is look to the Baby Steps. All leftover money should be reallocated to whichever Baby Step you're on. If you're on Baby Step 1, then you would put the leftover $25 toward your $1,000 starter emergency fund. If you're on Baby Step 2, then you would apply it as an extra payment toward the debt that has the lowest balance.

If you're on Baby Step 3, then you add the $25 leftover to your savings goal for your fully funded emergency fund. So, there really shouldn’t be any leftover money at the end of the month. Every dollar needs to be accounted for in the budget. Adjust the planned amount for groceries down to what you actually spend. Then, take that extra money and increase the planned amount somewhere else. You want your budget to balance down to zero.

When you give every dollar a name, you’re in control of your money. If you're able to spend less than you planned on a given budget item, that's a great opportunity to save, eliminate debt, or be a generous giver.

Now, we know what you're thinking. Sometimes, you've budgeted for an upcoming expense and need to carry that balance forward to next month. Maybe you're saving for a vacation, pay a bill twice a year, or you’re planning for Christmas (hint: It comes in December this year). We handle these situations a little differently. Those are funds, and yes, they would carry over to the next month.

Check out this article about Funds.