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The harder you work to cut expenses and live a frugal lifestyle, the more likely you are to experience a budgeting surplus. But, when that moment comes along, you may find yourself wondering what to do with your leftover budget money.
Well, in this article, I’m going to cover ten different options.
Let’s get started.
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Table Of Contents
#1 – Roll The Money Over
The first option for leftover budget money is to roll it into your budget for the following month. After all, if you were disciplined enough to stay under budget, why not make your life easier by giving yourself a little extra room.
For example, you could roll the money into your next grocery budget, so that you don’t have to scrimp so much on food. Or, you could roll the money into a miscellaneous budgeting fund to take a little pressure off a variety of budgeting categories.
Rolling leftover budget money into the following month is a great option that will help to ease your financial life. Plus, if you continue to stay under budget — month after month — your leftover money will act as a financial buffer for any unexpected budgeting mishaps.
#2 – Pay Off Debt
Getting out of debt is one of the best financial decisions you can make; and the faster, the better.
So, if you have any debt at all, you should use your leftover budget money to pay it off as fast as possible. I’m not just talking about credit cards. If you owe money on a car, boat, RV, your house, or anything else, throw every extra penny at it.
In fact, one of your main motivations for coming in under-budget each month should be the ability to pay extra toward debt.
Getting out of debt is one of the most freeing, relieving, and beneficial actions you can take in your financial life. So, get after it.
#3 – Start A Side Business
These days, there are a plethora of side businesses you can get into, with low start-up costs. Whether you want to become a virtual assistant, a freelancer, a blogger, or anything else, your leftover budget money can probably get you there.
For instance, if you want to start a WordPress blog, all you really need is a can-do attitude and a few bucks each month for hosting. On top of that, you could use the extra budget money to pay for an online class to level-up your blogging skills, or even a little bit of marketing.
Starting a side business is a great option for any leftover money in your budget. Who knows, you might even start a side business that could one day become your full-time job.
#4 – Add To Your Emergency Fund
If you lost your job tomorrow, would you have enough savings to support yourself (and your family) for the next few months? If not, it might be time to think about an emergency fund.
One of the key pillars of a strong financial situation is a solid emergency fund. We recommend that you build enough savings to support your living expenses for six months. So, if you have leftover budget money, adding it to your emergency fund is a very wise decision.
It might not be the most fun way to use extra money, but if the moment ever comes when you need it, you will be extremely glad it’s there.
#5 – Reward Yourself
I don’t think it’s any secret that budgeting can get a little boring at times. I would be lying if I told you it didn’t. And the tighter your budget is, the more stale life can become. But there is a solution, and it’s called fun money.
In every budget, you should have a category for money you get to spend on recreation, or things that bring you a little bit of joy. And if you are extremely disciplined throughout the month, and end up with some leftover money, it’s perfectly okay to spend it on some fun.
For example, my wife loves shopping for shoes and clothes, while I love shopping for woodworking tools. We also love going out for a fancy date every once in awhile. So, if we ever find ourselves with a budgeting surplus, you might find us spending the money on one of those activities.
There is nothing wrong with rewarding yourself. On the contrary, it can be a great motivator to stay under-budget.
#6 – Save For A Car
I can tell you with almost absolute certainty, that at some point, you are going to need or want a new car. (When I say new, I actually mean ‘new to you’). In addition, every car eventually needs new tires, repairs, or just regular maintenance, which is why using leftover budget money for car expenses is a great option.
#7 – Invest It
If you are out of debt, (with the exception of your mortgage), investing is one of the best things you can do with your leftover budget money. Why? Because even a little bit of money left to earn interest over a long period of time can grow to impressive levels.
For instance, if you managed to invest an extra $50 every month for the next 30 years and average a 10% annual return, your money would grow to over $100,000. That’s not bad, considering we’re just talking about your leftover money.
If you choose to invest the money, here are three great options:
1. Retirement
This is probably the most obvious way to invest your budgeting surplus, and one of the best. If you have a 401(k), IRA, or any other retirement account, even a little bit of extra money can make a huge difference.
2. College Fund
If you have children, and want to help them pay for college, consider throwing your leftover budget money into a 529 plan. It is a tax advantaged investment account that will allow your money to grow tax-free as long as you use the money to pay for education.
3. Index Funds
If you are unsure, or a little uneasy about investing, index funds are a great place to start. They are essentially mutual funds structured to mirror a particular index (i.e. the S&P 500). Index funds also come with the added bonus of low expense ratios, which is appealing to any investor.
#8 – Save For A Vacation
Travel is often one of the biggest motivators for people to get on a budget. There is just so much in this world to see. Plus, there is just something so sweet about getting out of town, and recharging your batteries for a week or two every year. But, if you want to travel a lot, you are going to need money.
That’s why you should consider putting your leftover budget money into a travel fund.
Think about it, if you manage to squeeze an extra $100 out of your budget every month, that’s $1,200 per year. Add that to the money you are already contributing to a travel fund, and what you end up with is a pretty wonderful annual vacation.
#9 – Give A Little Extra
I think we all know that the pursuit of money can be a dangerous game. It can corrupt people’s minds, and become the focal point of their entire life. Sadly, I think this is the rule, not the exception. However, money can also be used for really awesome things, too. Money is a tool. It’s what you choose to do with it that matters.
I really do believe that generosity plays a large role in financial contentment, and ultimately, financial success. Whether you are giving to your local church, or donating money to a worthy cause, giving is important for your financial life, spiritual life, and your relationships.
And while giving should be the first thing you do with any money you make, you can also use your leftover budget money to give a little extra.
#10 – Add To Your Gift And Party Fund
Throughout the year, you will probably participate in a number of holidays, birthdays, and random celebrations. And each one comes with its own set of expenses. So, if you ever have leftover budget money, you might want to consider adding it to a gift and party fund.
Can you imagine entering the Christmas season with enough money to buy all your gifts early?
How nice would it be to just pull money from a party fund every time you need to buy a bottle of wine for a dinner party you are attending?
Using your leftover money to pay for these kinds of expenses is a nice little bonus.
Final Thoughts
Budgeting can be hard work. So, if you have enough financial discipline to come in under-budget, you should make the most of your surplus.
Whether that means rewarding yourself with a little extra fun money, paying off debt, saving, or investing, there are plenty of great ways to maximize your leftover budget money.
What do you do with your leftover budget money? Comment below.
