Tips to Help You Stop Running Out of Money Before the End of the Month
Payday is great. Your checking account is full, and you finally have money to restock your shelves, buy the shoes you’ve been wanting and maybe go out to eat at a nice restaurant. If you find yourself celebrating each payday, then worrying the week after about how you are going to put gas in your car. Or if you are paid biweekly, you may stress at the beginning of the month when all the bills are due and have a lot of money leftover with your second paycheck. You have a budgeting and cash flow issue and you may have no savings.
You can fix this situation with a few different strategies.
Dealing With a Monthly Paycheck
If you are paid monthly, you will be flush at the beginning of the month and may be scraping by at the end. One way to deal with this is to divide your budget into weekly amounts. This works best for groceries and entertainment categories. You can do this by switching to cash for those categories and having a different envelope for each week. It can help to set it up to have your bills due at the beginning of the month when you know you will have the money to pay those bills. Dividing the remainder of your money into weekly amounts can help you manage everything.
Dealing With a Semi-Monthly Paycheck
If you are paid twice a month or every other week, you may have times when you are barely making it between paychecks, and times when you have a lot of extra money. The solution for this is to set aside money from the paycheck when your bills are not due to help cover them during the paycheck when money is tight. This means you would set aside half of your rent or mortgage payment and half of your utility costs. This can help even things out overall. If you know you will spend money if it is in the account you can have it automatically transferred to a savings account so that you do not see it.
Saving Up a Month’s Income
Another solution is to save up a month’s worth of income and to use that to cover the bills for the next month. This makes it easier to divide your spending up by week, and you will not be left feeling as stretched, especially if you break down your main spending categories into smaller ones. The envelope method can help you here, as well as a budget that maps out what you are going to spend when. You may want to take on a temporary second job in order to do this or you can use your tax refund or a bonus to save up the money quickly.
Remember Your Budget Is Your Friend
Many of these problems can be solved with a solid budget in place. The spending plan you set up each month will stop you from spending too much on shoes so that you do not have to eat Ramen noodles for the last week of every month. If you are tracking your spending and sticking to your plan, you should feel about the same on the first few days of the month as you do on the last few days of the money. If you are switching jobs and pay cycles, you may have a bit of an adjustment period as you get used to a new schedule.
However, if you have saved up your month’s salary and you are sticking to your budget limits you should be okay.
Don’t Forget Your Emergency Fund
We talk about emergency funds all of the time because they are one of the key tools to help you stick to your budget during life’s unexpected events. You need to be careful that you are not continuously dipping into your emergency fund because you overspent on shoes or groceries. It needs to be there for real emergencies like an emergency car repair or an unexpected trip to the hospital. This allows you to absorb those costs without adversely affecting every other part of your budget. When you used your emergency fund, it is important to replenish it as quickly as you can.
This means that you will always be ready to handle any disaster. This can help prevent your financial problems.
Make Sure It Is Not an Income Issue
If you are not making enough money, you will always be living from paycheck to paycheck. A budget will help you determine if you are making enough to cover your bills, food costs and basic necessities. If you are not making enough to cover your basic expenses, you will need to address your income issues in order to stop running out of money. This may mean changing jobs or going back to school so that you can qualify for a higher paying job. It is important to be proactive and make changes right away so that you do not run up additional debt that you will need to pay off.