Best Budgeting Practices for Your Particular Paycheck — Break the Paycheck to Paycheck Cycle
One major stress of budgeting is that no one person gets paid the same way. How are you supposed to make your money last when you get paid once a month? What about surviving bi-weekly when you have a mortgage payment that sucks up an entire paycheck? Then there are those crazy inconsistent incomes. How does that work? The real curveball is when you and your partner get paid totally differently. How in the world are you supposed to do this budgeting thing successfully? In this post, we’ve hunted down the best tips to budget successfully no matter what your paycheck looks like.
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Keep your budget organized
The best way to succeed with your budget, no matter how you get paid is to keep an organized budget. While there are a lot of online sources and apps that you can use to track everything, there is still something to be said for good-ol-fashioned paper and pencil.
If you know you’re more of a pencil and paper kind of budgeter, but you’re not someone who wants to spend all of your waking hours obsessing over your budget and crunching numbers, check out the Fun Sized Budget Bundle we’ve created. This simple budgeting system is designed to make budgeting way easier and a little more fun.
One paycheck per month
There are definitely pros and cons to getting only one paycheck per month.
The pros:
- You can pay all of your bills immediately
- No splitting paychecks or designating funds
- Less likely to have a fluctuating paycheck amount
The cons:
- Have to make one paycheck last the entire month
- No “bonus” paychecks for 5 week months
Tips for one paycheck living
Now, let’s break down the best practices for surviving the month when you only get paid once.
Save first
Always, always save first! This holds true for any type of paycheck but is especially helpful for those who get paid once per month. The reason being, because you have to make your money last all month long, it’s important to ensure you’re protecting your savings for those times when an emergency hits.
Schedule your bills for the beginning of the month
Because you are getting paid once a month, you have the luxury of being able to pay off your bills right away. This way, you don’t have that slight panic for the rest of the month wondering if you remembered to pay everything off.
Divide your variable spending into weeks
Once you have paid your bills, it’s important to take your variable spending for things like gas, groceries and fun money and divide your budget amounts into weeks.
For example: if you have $100 of fun money for the entire month, you want to break this number down in weeks by dividing by 4 (or 5 depending on the number of weeks), to give you $25 per week to spend on fun spending.
Track your spending
To make sure you are dividing all of your money correctly (and therefore avoiding being broke at the end of the month), go over your last few bank statements and track your spending.
How much do you really spend on groceries, gas, fun, out to eat, clothes etc. Getting a hard number instead of an estimate is going to help you better survive budgeting month by month. To do this you can use the printouts in the Fun Sized Budget Bundle.
Spending Envelopes
Another genius way to break up your budget by weeks is by taking out your funds in cash and then breaking them up into cash envelopes.
For example: if you have $600 budgeted for groceries for the month, you can separate this amount into 4 envelopes. Each envelope would then contain $150.
This is a great way to prevent yourself from over-using your debit card and can help you better stick to your allotted spending.
Bi-weekly paycheck
Bi-weekly income is probably one of the most common types of income for people.
The pros:
- You can expect paychecks to break up your month
- Bonus paychecks on odd week months can allow for bigger financial goals
The cons:
- The temptation of spending any “bonus” paychecks
- Managing your bills to keep your income even
Tips for Bi-Weekly Budgeting
So how do you make this bi-weekly paycheck gig work for you?
Budget bi-weekly (even when it’s more).
When calculating your income, plan
This will help you stay consistent month after month and will allow you to make major financial improvements on those odd months.
Make big plans for bonus checks
For those months where you do get a “bonus” paycheck, make smart budgeting plans that work toward your financial goals. It can be so tempting to instantly spend this money like it’s all for fun, but that can set you back so much in the long run!
Instead, try designating the majority of your paycheck toward savings or debt payoff, (click here for tracking printouts) and then, take a smaller percentage and go have some fun! You’ll feel so much more secure knowing that the first thing you did was make a wise money move before spending on your wants.
Divide your fixed expenses by 2
Be sure to total the cost of all of your fixed expenses, (mortgage, utilities, groceries) and divide the total amount for each category by 2. (The number of paychecks you budget for). Doing this breaks down your fixed expenses into an even amount so you can plan on how much to save from each paycheck.
For example: If your household expenses total $1,000 every 2 weeks, you can be sure to subtract this amount from your paycheck in order to find your remaining balance.
Then, put this $1,000 into a savings account to make sure you have your expenses covered. I recommend you open a CapitatlOne360 savings account.
Create due dates based on payday
Another thing that is going to be extra beneficial is trying to get your bills to come out around the same time as your paychecks. So maybe the 1st of the month, 15th or 30th. Whichever will work best based on your consistent paychecks.
Inconsistent income
How in the world are you supposed to plan when your paychecks are never the same? Here’s the scoop…
The pros:
- Some months you may earn more than others which allows you to work toward big financial goals
The cons:
- You may never be sure of how much you’ll earn in a month
- There may be months where you don’t get paid at all
Tips for inconsistent paychecks
There are several methods that work for inconsistent paychecks. Let’s break down some of the best practices and you can decide which one makes sense for you.
Low-ball your income
If you have a minimum amount you can expect to earn, base your budget off of that as best you can. This way, you are playing it safe and making sure you can cover expenses. Then, if and when you make a little extra, you can work that money into your budget as it comes.
Inconsistent paycheck strategies
There are two great budgeting methods that work great for inconsistent income. What you’ll have to do is kind of decide which type of budgeting method is going to work best for your type of income.
- Living off last months earnings
- Paying fixed expenses and saving the rest
Living off last month
While it would definitely take some transitioning and would require quite a bit of discipline,
This would require putting your paychecks into a savings account and then withdrawing your funds
Fixed expense planning
If living off last month’s paycheck is just not something that is going to work for you, there is still hope!
Just like with bi-weekly payments, take the time to calculate how much your fixed expenses will be. Don’t forget your living expenses as well like groceries and gas.
Once you know this total, you can plan your budget around
BONUS: Freelance Tips
For freelancers, you know that sometimes there will be months where you are bringing home significantly more than other months. It is so important to plan wisely for the months when you are making more money than usual.
During those months where you are getting paid beyond what you require, work to build up a savings account that can help sustain you during times where you may get paid less. Click here to set up transfers online. This will help you pay your bills and budget with less stress because you have a safety net built up.
Still totally confused?
Ultimately, you have to find what works for you when it comes to finding the best budgeting strategies for your paycheck. If you still find yourself with so. many. questions… check out The Bucket List Budget — a budgeting course I created for people who don’t do budgeting.
If you’re scrambling to try and figure out how to do all of this stuff, my biggest recommendation to you is to get help!! Delaying help when I needed it is one of my biggest financial regrets! Click here to check out The Bucket List Budget and see if maybe it’s the right fit for you!
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