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You know the easiest part about making a budget?
Writing down your “fantasy” budget at the beginning of the month.
You know the hardest part about budgeting?
Actually sticking to and following through with that budget when payday hits!
Every once in a while, I find myself creating these fantasy budgets where nothing comes up. You know, that budget where we spend exactly what we say we are going to spend and don’t go over.
Can you relate? It is so easy to live in a fantasy budget world where everything happens perfectly all month long. But that isn’t realistic in the slightest. Things come up. Friends invite you out. Your car breaks down, Your favorite shop has an awesome sale. You decide that you NEED ice cream and chips even though you are already over your grocery budget for the month. But, if the first thing you are doing on payday is running to get all of the treats that you have been waiting for since the last payday, you might be surprised at the excess money you have when you start planning better.
Budgets VERY rarely go according to the original plan. I have a blog post about how I stay motivated to stick to the budget. I do feel like there are little tricks to help with motivation, but honestly, motivation only gets you so far on hard days. Planning goes a lot farther than motivation.
Checking in on your budget every payday to make adjustments is the best ways to actually stick to your budget. It helps you know when to adjust spending and when you need to cut back in an area. I use The Savvy Budget Workbook/Tracker for all of my budgeting. It walks you through step by step of reviewing your spending and creating a budget that actually works for you.
The Step By Step Payday Routine For Sticking to Your Budget:
1. Review the last pay period
The very first thing I do is open up all of my accounts. I make sure all of my tracking is up to date from any spending I did. I choose to track my spending manually because it helps me see where money is going and coming from every week. Personally, I use The Savvy Budget Workbook to keep track of all of my spending.
Checking to make sure things came out of the account for the appropriate amount is super important. I always review the budget I set for the last payday to make sure that each of the bills are paid.
Then, I look at all of my spending and review each of my spending categories and see how I did on each one. Last, I review my financial goals that I had set for that pay period and see if I met or how close I was. If there is any money left, I figure out if I am rolling it over or sending it to a savings goal.
Questions to ask yourself:
- Did all of my bills get paid/come out of your bank?
- How much did I budget for _____?
- How much did I actually spend on _____?
- Where did the leftover money go?
- If I went over budget where did it come from?
- Do I have leftover money? (Where is this money going?)
2. Look at the next payday
I suggest filling out a calendar for your month to see what you need to budget for between now and the next payday. This will help you figure out the details without missing any bills. This is the best time to be real with yourself. If you spent $100 on fast food, the chance of you not spending ANY money on fast food is unlikely unless you are incredibly intentional about it. I do have a few tips to help you skip the drive thru, but this is the time to decide how much to budget for it.
Questions to Ask Yourself:
- What bills need paid?
- What events or holidays to I have this pay period that I will need to spend money?
- How much do I need for groceries until next payday?
- Add all of that up, What is left?
- Where do I want that leftover going?
- Are there sinking funds I want to contribute to?
- If you use a credit card for spending, is it paid off?
3. Cash Envelopes or Spending Account
This is a great thing to do right away on payday. If you wait too long, there is always the chance that you will end up spending money that was supposed to go to other things. Really the decision on this one is up to you. Cash envelopes are a great place to start when you are starting to figure out your spending expenses and building new spending habits. I like cash envelopes if you are doing a majority of your spending in person. Here is a great blog post to help figure out your cash envelopes.
Personally, I use 5 different bank accounts to help organize my spending. Here is a blog post that explains each of the 5 accounts, but one of them is a spending checking account. This is the only debit card that I try to keep in my wallet and this is the account that Brandon and I share. All of our spending money goes into this account and this is for things like groceries, gas, clothes, snacks, and other spending purchases. This helps set a limit on the things that we can spend on, but it also helps because we aren’t always together to spend out of cash envelopes.
Either way that you do it, payday is a great day to get the money where you need it to be. Whether it is withdrawing your spending money in cash or transferring it over into your spending account, this prevents excess spending. I love Ally bank!
Questions to ask yourself?
- Do I spend cash easily?
- Am I aiming to track every single dollar spent?
- Have I been successful at tracking my cash spending?
- Do I share a spending account with someone else (Significant other)?
4. Review larger bills
In our household, we get paid weekly. This means that no check is actually large enough to cover the mortgage because they are split up. So instead, I put a little bit aside each paycheck to make sure that we are ready to pay it for next month! This is insanely helpful because I am able to take a little from each check and then not stress. Other bills that you might consider doing this with could be a larger debt payment or a car payment.
Look at your bills and see if there are any bills worth splitting between paychecks to lessen the blow from one check. If so, I recommend having a local saving account to put the money in temporarily throughout the month so it is out of sight from your regular bill and spending accounts.
Questions to Ask Yourself
- Are there things that I have a hard time paying?
- Are there bills that leave my paycheck feeling a lot smaller
- If it feels smaller, would I be able to pay for everything if it was short a little bit?
- If I split this payment between two paychecks, would it ease up stress?
- Is this something I need to create a sinking fund for?
5. Make Debt Payments and Send Money to Savings
This is a great opportunity to send some money to savings. Even if it is $10-20 to start with, building the habit of paying yourself first. It is likely that you won’t miss that little money every payday and you might be surprised how fast it adds up. You can even set up an automatic transfer for the savings to come out before you even get a chance to spend it.
After savings is taken care of, I figure out if there is extra to throw towards debt. Can you make an extra payment towards your focus debt. I chose to use the debt snowball method to pay off my debt. So every payday, I would throw $15-20 extra towards a debt when I could. The little amounts add up a lot faster than you think!
6. Set Goals For the Pay Period
Setting mini goals for the pay period can keep you going until next payday. Usually I set 1 year goals, 3 month, 1 month, and pay period goals? I start at 1 year and break each one down to what I need to do each pay period to hit my one year goals. I have an blog post about setting goals.
By setting a few goals for each pay period you help challenge yourself to stay focused on your budget instead of getting complacent. You also give yourself something to work towards to help hit some of your bigger goals. Smaller habits help create bigger progress.
Ideas for goals to set:
- Can I spend less on groceries or gas?
- How can I make extra money to put towards a goal?
- Can I pay off ___ amount of debt?
- What can I do to aim for ____ leftover before next payday?
- Can I focus on a side hustle a little more to bring in more income?
These steps are SO important to complete each payday to help you reach your own financial success. By reviewing your last payday, planning for this one, getting your spending money read, planning for larger bills, and setting financial goals, you are ensuring that this payday will be more than just a fantasy budget that goes unfollowed. It is so easy to write down some numbers and pretend like you are going to follow them, but it is another thing to stick to your budget and check in on your spending.
What else do you do on payday to ensure that you stick to your budget?
Save this for next payday!
