Does unexpected income seem to mysteriously disappear?
An easy to create spending plan is the key to getting to enjoy your next gift of cash.
Reading time: approximately 2 minutes
You have and live by a budget, but what happens when you are the lucky recipient of some unexpected income?
Last weekend, my son-in-law and I were having this discussion. I refer to it as the disappearing dollar phenomenon.
The disappearing dollar phenomenon occurs when you receive some unexpected income, be it a birthday gift or a bonus at work, and somehow, almost like magic, it dwindles to nothing. You are left unable to account for the majority of what you received. It seems to have simply disappeared.
If you too have experienced this phenomenon, and would like to avoid it in the future, there is an easy solution.
To combat the phenomenon, make an intentional decision to create a spending plan for any future “found money”.
Note of interest: “Found Money” is an idiom for any money that you receive that is unexpected.
Making an intentional decision to create a spending plan before any money has been received puts an automatic STOP on spending the money before the spending plan has been established.
Failure to intentionally create a spending plan will cause the found money to dwindle away.
It’s only natural to fix a need when we have the ability to do so.
Someone needs lunch money, and you dip into the extra cash to hand over a couple of bucks.
You run short on a bill for the month and the found money gets hit again.
Mentally, the money is still available, but in reality, it is trickling away.
When you finally decide on what you would like to spend it, you find that, like magic, it has disappeared.
Creating a spending plan for found money is easy.
The same concept that applies to the Zero-Based Budget can be applied to a spending plan for unexpected income.
Before even a penny has been spent, spend every penny on paper (or if you prefer, a spreadsheet).
“Spending” the money on paper allows you to try out different scenarios. What you originally planned to do with the money might not seem to be the best option when you see it in black and white.
Spending the money on paper moves you one step closer to actually using the money according to your plan.
If your spending plan includes saving a part of the money, or spending it later, make that portion basically inaccessible.
Extra money in a drawer or your normal banking account is money subject to unintentional use.
Move the money to an account that is off limits or, if it’s cash, put it somewhere that makes it difficult to access.
For all intents and purposes, consider it gone!
Turn kids’ monetary gifts into teachable moments.
As kids get older, more and more of the money they receive will be in the form of cash gifts.
Teaching them to create a spending plan for any gift money will teach them how to wisely handle larger amounts as adults.
Believe it or not, they will enjoy “spending” the money on paper.
The disappearing dollar phenomenon does not need to be a reality.
Make the intentional decision to create a spending plan to apply to any found money. Then, you will be able to use the extra income in a way that benefits you the most.
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