Ever get blindsided by a big bill you totally forgot was coming? You’re not alone. Some expenses, such as gifts, travel, or annual bills, can be unpredictable and irregular in nature. That’s where a budget rollover can help. Let’s walk through what a rollover budget is, how it works in Lunch Money, and when it makes sense to use it.
What Is a Budget Rollover?
When you create a budget, you assign your income into different spending categories, and that money gets spent throughout the budget period. However, there may be money left over in some categories at the end of the period.
When this happens, you can choose to leave the unspent money in the category and make it available for spending in the next period, or return it to the general pool of funds for reallocation. Both options are considered budget rollovers because you are not zeroing out your budget and starting from scratch in the next period. Instead, you are including the leftover funds in your next budget.
Example of a Budget Rollover
Let’s say you’ve got an annual gift budget of $2,000. You probably don’t spend on gifts every month. But when birthdays or holidays roll around, you need a chunk of change.
With a rollover budget, you can set aside a little each month — say, $167, so that you hit $2,000 by the end of the year. The money just keeps piling up in your gift category until you’re ready to spend it.
Budget rollovers to a general pool can be a more flexible form of rollover. For example, if you budget $800 for groceries for the month and only spend $600, you may not need the extra $200 next month. You could roll over the additional $200 into the general pool to help cover other priorities next month.
Benefits of a Budget Rollover
The main benefit of rollovers is that they help you smooth out those “lumpy” expenses. The ones that don’t show up every month, but still need to be part of your budget. For example, your annual car insurance registration can be expensive. Instead of scrambling to find the cash when the bill hits, you can use a budget rollover to save a little each month for this expense and have it ready in your budget when the bill comes due.
How Budget Rollovers Work in Lunch Money
With Lunch Money, you can choose which budget categories roll over and which don’t. Here’s how:
- Select “Budget” from the Finances tab. Once there, you’ll see a small arrow on the far right of each budget category.
- Choose the category you want to edit.
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Click the little arrow on the far right.
- Select your preferred setting from the sidebar that appears.
You have three options:
Rollover to the same category next period: Any leftover funds in the category at the end of the budget period will be rolled over into the same category at the start of the next budget period.
Rollover to general pool next period: Any leftover funds in the category will be rolled over into the general pool to be reallocated at the start of the next budget period.
Do nothing (Not Recommended): You don’t have to roll over any budget categories if you don’t want to. This approach might be helpful for categories that don’t require a balance to be carried over from month to month, or if you’d rather start your budget from scratch each month.
Summary
Rollover budgets are a great way to smooth out unpredictable spending. They give you the flexibility to save up for those occasional, bigger-ticket expenses without throwing off your budget. It’s especially useful for categories like gifts, travel, or car repairs, where spending is not evenly distributed from month to month.
In contrast, fixed monthly expenses, such as groceries, may not require rollovers. Either way, Lunch Money gives you the flexibility to customize budget categories to roll over in the same category, to a general pool, or not to roll over at all, helping you tailor your budget to your actual spending habits.
