You created a budget – GREAT!! But now what do you do with it? A common reason that budgets fail is that they are only looked at once a month which means that it’s too late to fix any lapses in spending. Regularly checking into your budget throughout the month not only keeps you in a great financial mindset but it allows you to more effectively plan each month as well as upcoming future expenses. We are firm believers that the best time to check in on your budget is on the day you get paid for numerous reasons and we will discuss the 3 main reasons below.
- Payday is a great day, but also the day your Checking Account tells you the biggest lies.
It would be great if your Checking Account could know what future expenses you have coming up and tell you how much of the money in there is actually yours to spend, unfortunately it doesn’t. By checking in on your budget each time you get paid you will see how you are doing on your journey to achieve the goals that you set out to achieve. You will also take a look at upcoming expenses that you need to pay before your next paycheck hits which will give you a true picture of how much of that money is ACTUALLY YOURS to keep. If you got paid today and your checking account says $2,800 you might feel inclined to treat yourself to something nice without giving it much thought. If you have $2,400 in expenses that need to be paid before your next paycheck however, you may be regretting your decision in the near future. Without knowing how much money you truly have, it’s easy to fall into the trap of running out of money and tapping into savings or going into more debt – both of which are budget killers that prevent you from reaching YOUR GOALS.
- Planning for Future Expenses
Another key aspect to great budget management is to document and plan for upcoming expenses that fall outside of the normal budget. Examples include upcoming weddings, birthdays, holiday season etc. that can destroy a month or two of a budget if you don’t plan for them. By checking into your budget each time you get paid YOU get to decide what to do with the excess money BEFORE IT’S SPENT. In hindsight, most people would have chosen to do different things with their money than what they actually did with it. This isn’t because people have no will power most of the time, it’s because they failed to plan and when you fail to plan you plan to fail.
Starting this year, my wife and I decided to start putting $150 into a separate account each paycheck starting in October for the holidays. We will be getting paid 6 times so when the holidays roll around we will have $900 saved up for the sole purpose of spending it on gifts, food, family parties etc. The holidays should not be a stressful time and by doing this, we will have built up a nice cushion that we will not feel guilty spending on others this year.
- Start the paycheck period off strong!
The first few days after you are paid are vital to the success of your budget. It is so common to see budgets get ruined on payday and the first few days that follow. Make budgeting fun and have a cheap night on paydays moving forward – We’re talking staying in with frozen pizza, a bottle of wine and a movie for when you are done reviewing the budget. If you get paid every two weeks and can be as frugal as possible for the first 4-5 days, the odds are much better that you meet your budget goals each month and each paycheck.
If you aren’t regularly checking in with your budget we highly recommend that you START NOW. Give it a try the next time you get paid and see how you feel afterwards, our guess is that you will feel more confident in your ability to reach your goals and excited to realize that you are one small step closer to financial freedom. Also, don’t forget to write down all of the upcoming events you may have coming up in the next 3 months – this will help you ensure that they don’t destroy your budget or give you stress.
Happy Budgeting and remember YOUR GOALS AND THE WHY behind your decision to be better with your money.