I’m new to budgeting. I get paid every 2 weeks and the way that falls so far this year is basically the middle and last day of the month are paydays. All my major expenses (mortgage, daycare) are due the first week of the month, which means I have basically no money after those expenses until I get paid in the middle of the month. I can’t figure out how to fix this. Am I an idiot?
Sometimes it is easier to think about the beginning of a budget in three parts. Part 1 is collecting the information for the monthly budget – expenses, savings goals, debt repayment, whatever you have going on. Part 2 is looking at your monthly budget and your monthly income and making sure they balance. Part 3 is cash flow, which is where you are stuck. Sometimes you can get a payment moved or split, but I’ve never been lucky enough for that to work. The simplest way is to keep a small cushion in the checking account to carry forward from month to month to keep you from running out of cash. It is simple, but not easy if you are struggling from paycheck to paycheck, or if you are an impulsive spender. Eventually you will have a month with three checks, and maybe you can save half of it as a cushion to make the cash flow less problematic.
You could also switch to budgeting via pay period, rather than monthly. But you will still have to figure out how to get current or even ahead to do this.
This. I budget per check. The month is too broad for me.
For my bigger expenses, I budget half of it for each paycheck. So if your mortgage is $1000, I would budget $500 from the middle of the month paycheck and another $500 on the last paycheck of the month. You don’t have to physically do anything with the first $500, you’re just budgeting it out and that amount is unavailable from that middle of the month paycheck. Does that make sense?
I do this and keep a second account that money goes into per budgeted check. That way it’s out of sight, out of mind, and doesn’t accidentally get spent. I set my automatic payments to that account so once I drop my money, I really don’t have to do anything else. Just gotta make sure the money goes in.
If you can’t change the date on your bills, you are going to have to pay part of this month’s bills with the second paycheck of last month.
Divide your bills by 2. Mid-month paycheck, put that money aside, I recommend in a savings account. Then, the first of the month (or end of the month) you have the other half of the bills and you pay them all on the 1st. I get paid weekly and just deduct 1/4 of the bills each paycheck.
Something I have done over time is set $50-100 aside per paycheck to cover a month’s worth of expenses in advance. Now on top of my emergency fund, I always have a fixed expense pool to pull from, that way when I get paid, I refill the pool and transfer a portion to my savings. This has helped so much because rent due date and payday often don’t align nicely.
May also receive comments at r/yNAB and r/daveRamsey. Many were in this situation. What are you trying to ‘fix’?
What are you putting aside in savings, if anything?
We gave up and just created a budgeting system that lets you budget to a biweekly schedule rather than monthly. You’re not an idiot. You got this!
If you get paid every two weeks (not the 15th and 30th), the next time there’s a three paycheck month, put most of that check aside so that you can get ahead on your bills.
I’m trying to switch to YNAB which makes you use the previous month’s income for the current month’s expenses so that’s one option. Prior to YNAB though I just estimated the lowest my income would be each month when I made my budget and let the ‘actuals’ be in the red for a week or two until I got paid.
One way is, try to control your spending one month as much as possible on the second half of the month and keep aside and use it for next month’s first half. Going forward it will normalize that you have some money at the end of the month to use. Keep a small portion of your income in a separate account for 1-3 months until it reaches to cover your first 15 days of expenses and use it after that. I call it a Bridge Fund, refill with your second half income.
What worked for me was saving ahead - I live on last month’s income so the money goes into the bank in a special account, and then I transfer it to my primary account, and I use it for this month’s spending. I’m always a month ahead. The other thing is to have a running spreadsheet - list your bills for the month by date, add in fuel and food and those random bills that pop up quarterly, sort by the date and then insert a row for where your paydays fit.
You have to build about one month’s expenses in checking, then eventually a couple more months in a high-yield savings account. I would even pause all retirement investing except a 401k match until you have that cash buffer and emergency fund. You can go back to spending as you are now after that, just dial back the spending anytime you’re forced to use the emergency fund so you can build it back up.
Just use February’s two paychecks to pay for March’s bills and expenses.
Somehow you need to get two weeks ahead. So if there’s a month where you get a bonus, three pay periods, etc., use that to save half for 50% of mortgage and 50% of groceries. These seem to be the two biggest expenses. Or possibly suspend any discretionary savings for a month until you get rebalanced.
I get paid every two weeks too. I have a separate account for the mortgage and car payment (fixed monthly expenses). With the direct deposit split between that account and the cash account (for everything else). The two third paychecks are split the same way and I pay the car insurance from that amount and use the balance as savings.