Are you asking yourself why your paycheck runs as dry as a sink full of sand before you get paid again? I mean, really! Where did it go? I planned it out, I budgeted it, maybe I missed something? The truth is the little bit of time you let your paycheck rest in your bank account it’s already getting spent. Thinking about it now, I pretty much spent my paycheck in my head when I first see my balance.
If you haven’t already…
I wrote a post on my Budgeting process if you need to backtrack click here. My budgeting process is by percentage, and you’re doing your budgeting overviews on a quarterly and yearly basis. The only thing you consistently focusing on is paycheck to paycheck. Let’s face it! that is how most of us live nowadays. If your completely financially secure Kudos!! to you!! I’m preaching to the on the struggle, need to borrow money to next week, hoping that she doesn’t have to dip into her saving again person. I do want you to get there, that feeling of security, but you learn to relate more to someone who is growing in that direction.
Just got Paid!!
Here it is finally payday, yes! Don’t you just want to grab lunch and do a purchase run to Target and rack up!! No, no, no, no…pause, I’m saving your life right now.
There are 5 things you must do before and after you get paid. I know your thinking that’s 10 things! ha, you caught me but don’t worry it will be quick and easy.
- Not doing an “actual” budget after your estimated budget
- Waiting to pay bills that have interest rates on time.
- Rewarding yourself immediately
Before you get paid
The best tips to try not to overspend are the following… You’re going to want to this at least three days in advance before your payday. I’m going to list it in order, the same goes for payday. Keep in mind my tips are for people that need help with budgeting and always overspend what they actually have coming in.
- Create an estimated budget with the percentage model.
- Look at last week’s spending and calculate the totals to fit them in your percentage model. (If you need to know how to budget by percentage go here )
- Cut back on expenses that go over the scheduled percentage amount.
- Schedule fix bills to withdraw on your pay date (Larger fixed bills can be split according to your pay cycle. If they fit within the percentage schedule each bill on your pay date. )
- Make a grocery list, clothing or miscellaneous shopping list ahead, with store detail and estimated cost. (This includes any variable expenses you have to make)
- Create an actual paycheck budget vs. estimated budget (When you get your number closer to your actual you can just do one budget)
- Fill up your gas tank until next payday if possible. Place the remainder of the allocated funds aside in an envelope labeled “Gas” The money will be available when you need it, just for the purpose of filling up your tank.
- Do all necessary shopping budgeted on payday. I know this is hard but trust me the more time you give yourself to shop for necessary items you will spend it on stuff you don’t need.
- Pay all fixed bills, housing bill, and variable bills on payday, transfer allocated savings to savings acct ( this should be automated)
- Withdraw any remaining cash for variable expenses and placed them in labeled cash envelopes ( now put your card away)
To help make sense of different kinds of expenses I created a list below of both.
Variable Expenses (30%)
- Personal care
Fixed Expenses (30 %)
- Car payment
- Car insurance
- Credit card bill (if you have one)
- Electric ( home)
- Gas (home)
- Life insurance
Housing (25 %)
- Rent/mortgage (including taxes)
- Renters/ homeowners insurance
Savings/ Sinking funds (15%)
Divided into 5 categories. Estimate how much you can spend on each for the year to keep track.
- Emergency fund
- Car / Home maintenance
- Medical expenses
$50,000 for the year income
15% for Savings category for the year:$7,500
That means I can’t spend more than, $1,500 on each category for the year. During you quarterly budget review you can keep track. You can change the type of categories bases on your needs. Don’t need clothing? then try your child’s tuition. For a change, you can add clothing to the variable expense category. The trick is to have money put aside or being paid for any expense that pops up every year.
Congrats, if you completed this you will make it till next payday. Knowing yourself and your spending habits will help you succeed in making better choices. You can make it happen, you got this!!!
If you need help with your budgeting Process the Ultimate Financial Planner is a good first step!