Budgeting When You're Only Paid Once a Month/ May 11th, 2020
If you get a paycheck every week or biweekly, it’s pretty easy to spread out your bill payments so you’re not left short at the end of the month. But what if you are paid just once a month? For some, that last week can be a real nail-biter. Here are a few tips to help ensure you don’t run out of money before your next paycheck.
First, check your current monthly expenses and make sure the total isn’t higher than your income. To do that, create a budget. There are many free budget apps available online, as well as free spreadsheets or worksheets. Here’s a simple one from the CFPB. If it looks like you’re spending more than you earn, look at your non-essentials (dining out, entertainment, etc.) and see where you can cut back.
Next, pay your housing and utility bills at the same time to simplify your bill paying process. This should prevent the likelihood of missing a payment and incurring late fees.
There are 4 important categories that must always take priority in your budget over all others:
2. Rent or mortgage
If these expenses are neglected, you could lose your home, get sick, or lose your job. So, pay these bills as soon as your paycheck hits your account. To make that easier, consider setting up autopay to pay those bills the day after you are paid.
Then set up spending limits. When you complete your budget and factor in all your essential expenses, you find out how much you have left for non-essentials. Divide that amount in whatever way you choose and then stick to those limits.
Consider using a cash-only envelope system for things like entertainment or eating out. Take out a certain amount of cash from your account for those categories and put the money into envelopes. Once all the money in an envelope is used, you stop spending in that category for the rest of that month.
Life inevitably throws us curve balls, so it’s smart to set aside money for unexpected expenses, like car repairs. If you haven’t already started an emergency fund, consider starting now. You can start small with $5 or $10 a week and build up from there. If you have direct deposit, make saving easier by setting up an automatic transfer to move a set amount from your checking to your saving as soon as your paycheck is deposited. To build up your emergency fund quickly, deposit your tax refund or any bonuses into this account. This account will be a life saver when you’re hit with an expense you didn’t see coming or if you lose your job.
Whatever you do, don’t use credit cards to supplement your income. If you can’t pay off the full balance every month, or in a couple of months, you’ll be in debt forever. Stick to spending limits to keep your expenses below your monthly income. By doing so, you’ll save money and save yourself from a lot of anxiety.