Dreading the next paycheck, knowing you have already mentally overspent it on bills?
Dreaming of looking at your savings account fully funded? It seems so impossible but trying different ways of managing your money will help. The first thing is budgeting, and this is a must. Ugh, budgeting, I know! Paper, pen, and numbers, how boring! Until there’s a time, you’re staring at your money and are like, “Where did it go?” It becomes a must, but to make it less boring is finding a method that works for you.
Taking control of your money is one budget away. Try reading some other ways to make great changes
- Sinking funds categories you MUST have in your Budget
- Best Budgeting Strategies for New Parents
- How to use the 50/30/20 rule in your budget
- How to use the Zero-based budgeting method
I’ve slowly become obsessed with budgeting, and whats makes it more exciting is that there are so many ways. Just think of results, that weight lifted off your shoulders. When you’re monthly paycheck doesn’t feel enough, you can try the half payment method. It’s another technique where you split all your bills in half, and every time you get paid, you save half of the amount until it’s due.
Don’t think of it as only paying half of your bills for the month. You would start after having your bills already for a clean slate in the next paycheck put aside half of each bill. It probably would be best to start with a month when you have the least expenses. I know there could be a hint of that as being not possible. Another way to get a great start is to cut back on your bills in your current budgeting month. After that, you should have some wiggle room for saving half the payments.
How can you save money on your bills? Well, I may have some ideas, hmmm
- Master your Negotiation skills to lower your Bills
- Secret tips to save money on your monthly bills
- The Best Way to Pay your Bills on Time Every Month
- Techniques for having your bills Paid a Month in Advance
- How to Catch up on Late Bills or Payments
Where to begin using the Half Payment Method?
First, start by making a list of all your bills. Sort of like budgeting but more told the things you have to pay, not necessarily buy. You can allocate your budgeted amount into savings and variable expenses in each paycheck. Try dividing those in half as well to have more room to save.
If you get paid bi-weekly, you want to use your first paycheck to save and the second one to fill the second half. You would then pay your bills in the following month or reschedule your payments due by the end of the month. Once everything is paid, the cycle starts over again. To show you an example, I’ve created one below.
The budget below is starting with an income of $3,000 with a biweekly payment of $1,500.
- Rent 1000
- Electric 200
- Gas 200
- Cable 200
- Car Payment 300
- Car Insurance 300
Since you only have 1500 each paycheck, you can see how this would put you in the negative.
Half Payment ( savings for each check)
- Rent 500
- Electric 100
- Gas 100
- Cable 200
- Car Payment 150
- Car Insurance 150
Now you have a positive 400 to split between savings and variable expenses. Do you feel freedom? Feels like money in my bank account, and it doesn’t have a negative sign.
There are some things you have to keep in mind. The most important is saving, not spending half. I know it’s difficult to look at this amount in your account and see the possibilities. It’s just that you can’t spend it. You have to be really disciplined about this and not do things to tempt yourself.
Do you have an issue with spending? So did I, so I had to put my money somewhere else. I use an app called Digit for my sinking funds, but I find it works well in this scenario. You can easily transfer money back and forth, free of charge. When you’re ready to pay for a bill, transfer it to your account.
Do you need other options? Well, that’s what I’m here for more advice. There are some other ways you can store that money.
Create cash envelopes or digital envelopes
Cash can seem prehistoric now; the digital age has conquered it. The main reason cash is mentioned when you first begin relief from debt is because of the emotion. When you start to contrast a bad habit with something good you want to implement, using emotions is the best way to trick yourself into believing in something else. After belief comes the actions, you tend to do what you believe. Experts suggest using cash because you develop a physical attachment to it. When you use a card, you don’t see the exchange or feel like you’re giving something away.
Cash envelopes are a way to budget your cash into separate categories. Every envelope is titled for its purpose. The funds are pre-calculated, and the envelopes get filled with that amount. Once the envelope is spent, you can’t take from another to purchase for that category. You can put your half Payment away into cash envelopes. After you reach your second payment installment, you can then pay your bills.
Open up free online bank accounts.
Not all bills can be paid with cash. Well, they can, but then you would spend time grabbing a money order, and that’s another conversation. The point is you can easily transfer funds between accounts most of the time without fees. Really no fees? Well, as I mentioned before, I use Digit to transfer my fund back in forth. I’ve never had any issues, but I’m aware that not everyone can download this app. My solution is to have multiple bank accounts.
Online bank accounts are mostly free from fees and quick to set up. You can easily open you another bank account to transfer all your half-payments from your original account, out of sight, out of mind. Secondly, transfer your savings into your savings account. Whatever you have left can be used for variable expenses. When you’re the second paycheck comes around, transfer the funds again, and schedule payments from the online account. By doing the transfers, you have the freedom to spend what’s left into the original account without the worry of overspending.
Thinking about trying this technique for your next budget? I’m excited to hear all about it. If you want to share your experience, please reach out to me on any social channels. When something is not working as you thought, it’s time to switch it up. Trying a different way of budgeting is just trial and error. Remember, it doesn’t hurt to learn something new.