Lets say you had 100$ left in the month’s budget but then you had to spend 300$ on something. The month is about to end. Do you deduct that money from your savings? or Do you loan that amount from your next month’s budget?
Divide large expenses by months left to save; set aside monthly to prepare for the payment.
I have a “budget buffer” category I use. When I don’t spend all of last months budget I roll it over and this gives me a buffer to use on months when an unexpected expense goes a little over but not so much that I want to use savings.
Car repair is $300, funded from savings. Budget shows $200 overspent, savings cover the gap.
I don’t really get how you can take from money you don’t have yet…so for me I’d take the 300 from my savings account and then I guess if I wanted to/ was able I could put it back in the account next month when I had the funds.
@LENAHZ The idea being that you reduce your next month’s budget so that your savings are not affected.
So:
1000 in savings
500 January budget
600 expenses in January
Therefore:
400 February budget
Whilst savings remain 1000
@soundmind And then you wind up with:
400 February budget 500 February expenses
300 April budget 500 April expenses.
Or you could take the 300 out of savings, and revise your budget plan to include repayment of the 300 into your savings.
Shift funds from other budget categories, use savings with a plan to replenish, or allocate 10% float.