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Ask Dave

Envelope Excess

Angela asks what to do with leftover envelope money at the end of the month.

QUESTION: Angela on Facebook asks what to do with leftover envelope money at the end of the month.

ANSWER: In some envelopes, you leave it there. The car repair envelope—your car didn’t break this month. Leave it there. Add to it next month. Add to it the next month because your car repair might equal three months of car repair budgeting later, so it becomes a little miniature savings account for car repairs in that case.

If it is in food, leave it there the first month or two you’re doing your budget, but if month in and month out you always have money left in your food envelope, that says you’re putting too much in the food envelope and you need to adjust it down.

If it’s clothing, I would leave it there because truthfully, most people—with the exception of heavy shoppers—don’t buy clothing monthly. Men buy clothing every three years—some men like me. My belief is if you keep that suit coat long enough, that lapel will come back in style. Some men buy clothing monthly but very few. Some ladies do but very few. Truthfully, very little children’s clothing is done monthly. Most of the time, about two or three times a year—about quarterly—you’ll do your clothing shopping, so you can let your clothing envelope build up a little bit and then when it’s time to go back to school, it’s a big clothing month then but you’ve got the money because for the last three or four months, you’ve just bought a little pack of socks or something. It wasn’t a big deal.

Let a few of those build up, but if it gets to be too much in there and you’re not using it as a savings program, then you need to cut back what you’re allocating to that category.