How To Budget When You Are Paid Once a Month: 4 Simple Steps
Creating budgets that actually work is one of my favorite things to do. Ahem. Nerd alert. But honestly, a budget that works on paper and fails to function in real life doesn’t help anyone. So, when you are preparing a budget that you actually want to work when put into practice, there are many factors to consider. And frequency of pay is definitely one of them.
Most Americans are paid on a semi-monthly (twice a month) or biweekly (every other week) schedule. For those of us who don’t budget regularly or who haven’t mastered budgeting yet, having those paychecks coming every couple of weeks is definitely helpful.
But when you get paid once a month, you need to have a plan in place to make sure that money lasts as long as you need it to. And you need a healthy dose of discipline to be sure you don’t spend all your money before your next payday. Ever heard the phrase “There’s too much month left at the end of the money?” If that’s you, I’ve got you covered. Today, we’re going to walk through a simple 4-step plan for budgeting when you get paid once a month. So, let’s get started!
How To Budget When You Are Paid Once a Month
Step One – Pay All Your Known Bills When You Get Paid
In a way, being paid once a month is the easiest pay schedule in terms of budgeting. You know exactly how much money you have to last for the month, and you don’t have the stress of wondering when and how much you’ll get paid like those who are paid on an irregular basis.
So, when you get paid, immediately pay all of your monthly bills that will come due before your next payday.
Immediately paying your bills on payday ensures your bills are paid on time. It also ensures that you don’t spend money dedicated to bills on something else and risk being unable to pay your bills when they come due.
I budget by paycheck and I’m paid semi-monthly. Each payday, I know exactly what bills need to come from that paycheck, and I pay them immediately. I can’t emphasize enough how much I love this method of managing my money--immediately paying my bills on payday makes everything easier, keeps me on track, and eliminates stress.
Step Two – Set Aside Money for Unknown Bills
Dealing with Irregular Bills
I can hear you now saying, but what about bills that aren’t a set amount (like utility bills) and I don’t know how much they’re going to be when I get paid (because I haven’t got the bill yet?) Then what?
In those cases, you should set aside an amount for the irregular bill and then pay the irregular bill immediately, as soon as you receive it.
Here’s how to know how much to set aside:
A part of any good financial plan includes tracking your spending. If you track your spending, you’ll know, on average, how much your monthly utilities are. If you don’t track your spending, (start now!) you can always pull your bank statements to review your past utility bills and get a good idea about what to expect. You can get the free expense tracker below as part of my Free Resource Library.
For example, last year, we spent a total of $1,017 on our water bill. Broken down over 12 months, this averages to $84.75 per month. This year, we’ll round up and put $100 in our water bill “envelope” each month.
Some months, the bill will be less than $84.75; some months it will be more. That’s why we add a bit to it, and plan to put away $100 per month. When the water bill is less than that, we’ll leave any excess in the water bill envelope. That way, a small cushion builds over time for when the bill is higher than expected.
So, long story short on those irregular bills: Track your spending. Determine the average amount of the irregular bill per month. Round that figure up a bit, and set it aside each month. Don’t spend it on anything else! And pay that irregular bill the moment you get it.
Step Three – Make a Zero-Based Budget for Your Remaining Money
With all the money that is left after your bills are either paid or allocated for, you should then make a zero-based budget for your remaining money.
A zero-based budget is a way of budgeting that accounts for every single dollar you have. If you have $1,000 left after you pay or allocate for your bills, your zero-based budget will assign a category to every one of those $1,000. That way, you know exactly where your money is going, and you never have to wonder where it went.
In your zero-based budget, you should account for other expenditures that aren’t technically bills. This includes things like gasoline for your car, groceries, fun money, sinking funds, extra debt payments, and eating out, for example.
To find out exactly how to make your zero-based budget, start with these two posts:
How to Start Budgeting When you Have No Idea What You’re Doing
The Budgeting Method That Will Change Your Life: A Detailed Guide to Making a Zero Based Budget
You can see all of my personal zero-based budgets on Instagram, in my saved stories under Budgets.
Step Four – Consider Dividing Your Money
You may find it helpful to divide any money that remains after you’ve covered your bills. This will keep you from running out of money before the month is over.
Let’s say you’ve paid your bills or allocated for them and made a zero-based budget, as discussed in Steps 1-3, above. You’ve got $400 left for groceries and it’s going to be 4 weeks until your next payday.
You can consider breaking down your budget even further by giving yourself only $100 for groceries each week. This will ensure you don’t spend $300 in the first week and starve the rest of the month.
One practical way to put this plan into action is to use cash envelopes. You would simply withdraw $100 in cash and place it in a cash envelope labeled groceries. When the money in the envelope is gone… it’s gone. You’ll have to wait until next week to spend anymore in this category. If you have a problem with overspending, switching to cash envelopes is a helpful way to curb your spending and help you stay within budget.
Need Help With Your Budget? Try a Budget Review!!
When it comes to budgeting, we may think we have it all together, but having a fresh set of eyes on your budget can help you see things you’ve been overlooking.
Maybe you’re over budget and need help deciding how to cut expenses. Maybe you’re worried you’re not budgeting for everything you need to be budgeting for. Maybe you’re pretty sure your budget is 100% awesome and you just want some reassurance that you are doing things correctly.
Well, you’re in luck! As a self-confessed budget nerd, I offer a budget review service, where you prepare your own budget and send to me for review, along with a list of your debts and your financial goals.
I will review your budget tell you what changes I would make if it were my budget.
I’ll point out things like:
Expenses you should consider eliminating to meet your financial goals sooner.
Changes you can make to your budget to eliminate your debt faster.
Expenses you should consider adding to your budget, so you aren’t caught off guard when unexpected expenses arise.
General areas where your budget could use some improvement, or …
I’ll let you know your budget is perfectly on track! Sometimes we know exactly what we need to do, we just want some assurance we’re doing it correctly! I can do that, too.
If you’re interested in a budget review, you can sign up here!
Your Turn!
Do you get paid on a monthly basis? Or have you ever been paid only once a month? How did that work for you? Were you disciplined enough to make it work? What tips do you have for those struggling to make a monthly pay schedule work for them? Tell me in the comments down below!
Like what you’ve read? Be sure to pin it for your friends to see, too!
