When pay day rolls around, it’s easy to feel the sudden rush of excitement after seeing your bank balance go up. A mistake we often make is immediately splurging, without leaving enough for rent, bills and day to day expenses such as petrol, travel and food. It doesn’t matter if you’re paid weekly, fortnightly or monthly; you can shift your payday habits to ensure you have a good routine in place, with necessary spending boundaries.
If you find yourself checking the calendar each month and counting down until pay day, it’s likely you’re spending beyond your means. We give you 4 tips on how to be a pay day pro with a new money strategy.
- Set up your direct debits
Sometimes there are issues with the bank or pay delays, so schedule your direct debits to deduct a few days after your fixed pay day. This takes the thinking out of pay day and ensures you’re only left with the money that can be funnelled into savings, investments or on treats such as leisure events or items you’ve been waiting to purchase. Depending on your personal responsibilities, these automatic deductions could be rent, subscriptions, memberships, mobile and internet bills, insurances, etc. If you can hold off spending until you’ve made the important and necessary payments, you’ll have a better idea of your disposable income and spending habits for the future.
- Give some love to your emergency fund
One of your main monetary priorities may be setting up an emergency fund to ensure that if anything ever goes wrong, you’ll be covered financially so that you can either pay for damages or treatment, or take unpaid time off from work without stress. Use pay day to immediately funnel some funds into your emergency fund. There’s no set or recommended amount to put away, just whatever you can spare, keeping in mind that one day it may be your saving grace. Getting into a routine of investing in your emergency fund will ensure it slowly builds, just as your superannuation does over time via contributions, without you feeling like there’s been a significant money drop.
- Set up recurring investing deposits
If you’re looking toward the world of investing but don’t feel that you have the money behind you, it could be due to financial mismanagement on pay day. One option is to set up a recurring deposit into your preferred investing app, typically a micro-investing app, to slowly put your money to work. This takes the hassle and thinking out of investing and may be the push you need to get into the investing world without feeling that you’ve just invested a huge chunk of your payslip into shares. Plus, if money runs low and you need to withdraw your invested funds, they’re sitting there waiting for you – ideally with a profitable increase from growth.
- Set up weekly budgets
If you’re paid fortnightly or monthly you’ll typically notice that some weeks are more expensive than others. Although there are sporadic social events that arise or random disasters that occur such as your car breaking down, successful budgeting generally follows a strict spending routine. Set yourself a weekly spending limit, taking into consideration the essentials such as public transport costs and groceries, and make weekly envelopes splitting the funds equally in physical cash. Once that envelope runs out, you’ve reached your spending quota for the week and aren’t able to dig into savings as easily as you could if you continued paying with your debit or credit card. This allows you to both stay on track throughout the month and not cheat with the tempting splurges that may come up such as treating yourself to lunch multiple days of the working week.
Eventually as you start to build better habits, you’ll begin to notice where you were previously spending beyond your means and it may even teach you some valuable lessons about budgeting in the future.