During a Money for Life Coaching Session the other day I noticed that my clients had a few envelopes that had gone into the red. I asked them what had happened, and they explained that some unexpected expenses had arisen due to a family event, a forgotten bill, etc. We talked through a few different ways they could balance out the envelopes (envelope to envelope transfers, using the sweep feature, etc.) and reviewed why it’s so important to keep the envelopes from going into the negative.
Overdrawn envelopes basically mean that you have overspent your allocated amount for that category. It’s not the end of the world. Things happen that cause you periodically to overspend. The critical thing however, is that you get the envelopes balanced out as quickly as possible so that you know how much money you truly have available to spend. If one envelope is negative $10, and one is positive $10, than in reality you have $0.
While they were convinced that this was a one-time thing, and that they wouldn’t have unexpected expenses again; unfortunately, that just isn’t realistic. Unexpected expenses happen, that is just the way life is. The way you handle it however, determines if it will derail your spending plan or just be a small bump in the road.
When unexpected or surprise expenses occur balance out your envelopes as quickly as possible, and then review your spending plan to better plan for these types of expenses in the future. That may mean adding a new envelope, or perhaps readjusting the way you are funding existing envelopes. The key is to learn from this experience and work to avoid it in the future. The same thing may not happen, but I assure you, somewhere, sometime, something unexpected will need to be purchased.
Purchasing an outfit for a last minute family event may not be exactly what happens next time, but perhaps you’ll be out for the evening and break the heel off your shoe? You may have extra pair of shoes in the car, or maybe you’ll have time to run home and change… or perhaps you’ll have to stop and pick something up because it’s an important occasion that you just can’t miss.
Money for Life Coach