Have you ever felt like the more you make, the less you have? You know you’re bringing more money home each month, but somehow it feels like you have less to spend than ever. That’s what it feels like when you don’t have control over your spending, and that’s when it’s more important than ever to have a budget.
I experienced this a few months ago when I got a raise at work. Perfect, I thought, since I was already living off my current income the raise would all be extra. I could set it aside towards a goal in EEBA, add it to my Savings, or whatever I needed. Unsure of how I wanted to use the extra money, I decided to just let it gather in my Unallocated Money. As the months passed, however, I was surprised to find that my Unallocated Money balance wasn’t increasing as I thought it would, but was in fact decreasing. What was going on?
I looked into my reports in EEBA and found that as my income increased, so did my spending. I hadn’t noticed the change during the month, it was a little extra there, a little extra there, but over the course of the month my extra spending had eaten up all of my raise and then some!
The problem was that I didn’t budget for my raise. Instead of proactively putting it aside into a goal Envelope or Savings, I had let it sit in my Unallocated Money. I use my Unallocated to keep a one month cushion for my budget, but the extra money from my raise was giving me more than I needed to fund the next month. Seeing the extra money gather had made it too tempting for me to over spend in my other Envelopes.
Now my budget has a place for all of my income, including my raise. I ended up adding a little to my Entertainment Envelope, but budgeted the bulk of it to my Savings. With just a month’s cushion in my Unallocated, I’m not tempted to spend more than I should.
There’s nothing inherently wrong with spending more when you have more to spend, but make sure it’s a choice you’re making, and not the result of sloppy budgeting!