Because I like data and charts, here's a picture of my next 26 paycheck dates and the total bills that are due after that check, but before the next payday.
My takehome is about $1078 per paycheck on average. As you can see, in that 26 bi-weekly period, there would be 3 paychecks where my bills are more than my takehome. (And 3 more paychecks where bills would take up nearly my whole check.) If every payday I paid my bills that were due, and considered the rest of the paycheck available for groceries, eating out, etc., there would be those paychecks that I was in hot water and start getting late fees, insufficient fund penalties, etc. because my check wasn't enough.
But then again, there's every so often where I would have nearly $800 leftover after paying all the bills that were due after that paycheck (and yes, these are typically near when I get 3 paychecks in a month). These are keys to breaking out of living paycheck-to-paycheck. You can see at the bottom of the picture that my average bills are $678, meaning my "other" spending available to me is $400/paycheck for food, clothes, gas, etc.
If those "extra" paychecks I kept only spending $400 on the misc./"nonbill" spending and SAVED that extra $400 instead of seeing $800 of available money and spending all of it, eventually I would have enough buffer built up. I'd never again need to scramble during those paychecks where my bills exceed my income.
So MY SIMPLE SYSTEM FOR HOW I PERSONALLY STOPPED LIVING PAYCHECK TO PAYCHECK: what I do is get that $400 directly deposited into a separate checking account when I get paid. I can spend that entire $400 on groceries, movies, concerts, booze, whatever. I ALWAYS can spend that $400 each check (or save it for vacations, put extra towards debt, whatever my goals are). The rest of my paycheck, the other $678, gets deposited into the "bills" checking account which is essentially always at $0 available. I may look at it today and it may have a $1200 balance sometimes. But this chart I've linked to shows how I don't REALLY have $1200, since eventually it will be needed for some future bill.
This way, there's always the money for those set bills, and I don't really have to "budget" each month. An emergency fund for unexpected expenses helps, too. But forecasting for the next year and getting that average amount directly deposited made the biggest difference for me when I was starting out.
March 21, 2018 at 10:20AM
