When I was growing up Mum would say we had “more month than money”. She said it often.
It wasn’t until I was out on my own that I understood what that meant.
When I received my first few Friday paycheques, they were usually gone by Wednesday. Maybe Thursday. I had to hope my next paycheque would at least cover the rent.
It didn’t take long to realize that system didn’t work. Eventually I figured out how to budget my paycheques so I could end up with more money than month. I still do this.
1 So get out your pencil, eraser, calculator and paper, or printout the Paycheque Budget Worksheet, grab a bowl of popcorn and lets get started.
2 Know Your Pay Dates
Look on the calendar and figure out your pay dates. Do you get paid every two weeks, on the 15th and last calendar date or once a month?
Knowing these dates will help you plan which expenses will get paid with what money. It will also let you know when you need to set some money aside for an upcoming payment.
Write the dates in the Pay Date area.
3 Know Your Expenses
For the purposes of this budget, you just want your mandatory expenses.
These are not just your fixed expenses, like rent or mortgage, equalized utility payments or car payments and bus passes, these are also flexible expenses like groceries, tobacco – if you are a smoker, pet supplies and out of pocket prescriptions. The things you need to buy every month.
Write the amount of your fixed expenses in first. These ones you should know by heart.
For the flexible expenses, write in the approximate amount that you usually spend. Over shoot some on your guesstimates. It will either end up closer to the truth or give you a little room.
4 Write in the Dates Your Expenses are Due
Most fixed expenses are due on the same date every month, like rent on the first of the month. The due date for utilities can be found on your monthly statement.
For expenses like groceries and cat food write down the date you do your shopping for these items. So if you grocery shop every Saturday, make a grocery line for each Saturday in that month.
5 Fit Your Expenses into Your Pay Dates
Now the fun begins.
Take a look at your pay date(s) and your expense due dates. Write the pay dates beside the expenses that you would just naturally pay from those paycheques.
When your done, add up the expenses you have assigned for each paycheque. Are you over or under?
6 Add in Your Set Aside Amounts
Some expenses need to be partially paid by more than one paycheque.
A common example would be Rent or Mortgage payments. For most people this is the largest regular monthly expense. I’m paid twice a month, so I set aside half of my Rent with one paycheque and then pay the other half with the next one.
Another reason for setting aside an amount is for payments that need to be made BEFORE payday. Setting aside the amount for those payments keeps your payment from being late which can hurt your credit score.
Write in the amounts you need to set aside from each paycheque and assign it to a particular payment, if needed.
7 Calculate the Annual or Irregular Expenses
Expenses that come up only once a year, or every few months should have a small portion saved for them each paycheque.
This alleviates getting hit hard when the whole of that payment comes up.
On your Paycheque Budget Worksheet, write in what the payment is for, eg. Christmas, birthday, insurance, new winter boots, oil change etc.
Calculate the amount and the number of paydates you have between now and when the expense comes up.
To Calculate – (expense amount) divided by (number of paydates) = Set Aside Amount.
Add this into your budget worksheet.
Now you have a basic, simple paycheque budget to help guide you through your mandatory expenses. Hopefully you find you have ‘more money than month’ at the end of it.
The extra is your savings and fun money.
I do a Paycheque Budget for three months at a time, I find that if something unexpected comes up, it gives me an idea of when and how I can get back on track.
Hope this helps. Let me know in the comments.
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Building Your Household Financial Foundation? Check These Out:
- Household Financial Plan The First Step – Setting Financial Goals
- Find Your Starting Point – Calculate Your Net Worth
- Where Did All the Money Go? Examining Household Cash Flow
- How To Create a Monthly Budget Spending Plan
Please Note: I am not a licensed professional. The information in this post is for reference and entertainment purposes only. If this post inspired you to try something new, please speak to a licenced professional or financial councillor first.