Getting paid monthly can be both a blessing and also stress inducing. When getting paid once a month, you can pay all of your monthly expenses at once and hit your financial goals faster. On the other hand, it can be hard to make your money last to the end of the month.
So how do you plan your finances when getting paid monthly? Below are key tips on planning out your finances if you are getting paid once a month!
1. Add up all of your fixed and variable expenses
Make a list of all of your monthly expenses. First, list all your fixed expenses, such as rent and utilities. Then write out your variable expenses, such as groceries, petrol, and entertainment.
If you're unsure of what costs to include, a great way to check is to go through your bank account statements for the last three months.
You can usually find a pattern within the previous month but pulling three months' worth of expenses can help you determine how much you are genuinely spending and in what categories. When you get paid once a month, it's important to know where every penny goes.
2. Make a monthly budget
The next step to making getting paid monthly work for you is to create a monthly budget. There are a few different ways you can create a budget. Here are a few popular methods to try:
Zero-based budgeting is when you assign every rupee a job and leave nothing to your imagination. A zero-based budget accounts for every rupee, whether you spend it on expenses, debt, or savings.
It's all dependent on your expenses and lifestyle. You may find by giving every rupee a job, you have more money to spend than you initially thought.
50-30-20 budgeting method:
The 50-30-20 budget is a straightforward approach to tracking your finances. Instead of dividing your spending into individual categories, you designate 50% of your income towards needs, 30% towards wants, and 20% towards savings or debt. You can focus on your overall financial health instead of chasing down every rupee spent.
Cash envelope system:
Don't lose hope if zero-based budgeting seems too complicated and the 50-30-20 method is too lax. There is still the cash envelope method. After you pay your fixed expenses, divide up your remaining cash into different general categories and place it into an envelope with that category's name. So instead of chasing down your debit card purchases, you rely on the cash on hand. It's hard to overspend and less work to account for.
3. Create a financial buffer
Stuff happens. Things like medical bills or vet expenses can pop up at the most inconvenient times. That's why it's essential to build up a cash reserve or designate sinking funds to help with these expenses.
Every paycheck, put aside a certain amount such as Rs.5000 to keep in your checking account so you have the cash to cover these unexpected expenses while not relying on a credit card. Creating a financial buffer when getting paid monthly is crucial to success.
4. Try to pay your bills ahead of time
If getting paid once a month still seems daunting to you, there's the option of paying ahead on your bills. I do this with some of my current fixed and variable expenses. The more in advance I pay bills, the less likely I worry at the thought of my paycheck being late or if I have an unexpected expense. Check if any providers give a discount when paid in advance, like car insurance, and start from there.
5. Reassess your financial plan if needed
Following a new financial plan takes time. Don't be afraid also to reassess your financial plan as needed. Sometimes, a specific budgeting method won't work for us, or some tips don't work. Be persistent, and don't give up.
The key to getting paid monthly is always to plan ahead. Things tend to take you less by surprise when you prepare for the month than if you were winging it.
Planning for the month when getting paid monthly also allows you to achieve your money goals faster and feel more confident. Remember, you can stay on track with your finances even if you are getting paid once a month!
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