How to Budget by Paycheck with Success
When you first move out of your parents’ home and live on your own, you may find it tough to make your paychecks cover everything you think you need. Notice the things you need bit. It just isn’t that easy to transition from living in a situation where you have no rent to pay and no utility bills to one where the entirety of the bills belong to you. Your paycheck pays for the rent, the utility bills, the groceries, the transportation, the sundries, the clothes, the shoes, the entertainment. You are on your own, a bird who has flown out of the nest and now lives on your own.
Gasp.
Yep. Depending on where you live, your rent probably requires about one-third of your monthly budget. Wait? You don’t have a budget yet?
Set Up Your Daily, Weekly Or Monthly Budget With Budgetry.
Let’s start there. We’ll get you a budget.
You cannot pull it out of a top hat like a magician does a rabbit. You have to sit down, spread out your bills, write down what you really want to do each month, and make a list. That is all a budget really consists of – a list of expenses, the due date of each, and the allocation of your pay or other income to pay for it.
Creating Your First Financial Budget
Needs
Make a list of all of the things you have to pay for each month. This does not mean the stuff you want. It refers to actual survival bills, such as rent, utilities, groceries, and sundries like soap, shampoo, and toothpaste. You need to have a roof over your head with a floor beneath your feet and four walls around you. That abode needs to have electricity and water at a minimum. You should have groceries to eat and the required items to bathe each day and smell decent. Those items only qualify as needs. Now that you set the priority items, you add in the wants.
Wants
You might want an unlimited cell phone plan. You might want satellite television. You might want to buy a Starbucks coffee every day. Hmm… that might not fit into your budget, and dear little birds, you must fly the coop or nest and live on your own money.
You can write this all down on paper or use a spreadsheet like in Google Office or Microsoft Office, or you can use a budgeting app. However, if you want to do this, you need to make the list of must-pay items first and allocate the money. The other must-have is savings.
Savings
You pay 10 percent of your income each month to yourself for savings. That lets you get ahead in life. You forgo buying the disposable things you want right now for the awesome stuff you will have in the future. The other reason to do this: you can rely on the savings in an emergency. If some huge bill arises like your car breaking down, your emergency savings pay for this. That is a smart money budget.
Getting Started With a Budget By Paycheck
When you first start out, you probably get paid weekly or every two weeks. Sure, it would seem easier if on the first of each month your pay appeared all at once in your bank account via direct deposit, but that probably won’t happen until you graduate college or vocational school and land your first career position.
In the US, 55.5 percent of the workforce works for hourly wages. The remainder falls into the category of salaried workers, but that includes business owners. The average income for employed individuals for 2022, the latest available annual data, stands at $60,575
So, make your monthly budget first to pay all the bills from that total monthly intake of income. Rather than think of it as meager if you earn below the median, show gratitude for what you make and plan wisely to make it stretch further. That will help.
Now, you make a mini-budget for each paycheck. While this might sound like more work, you only have to do it once and it makes sticking to your budget easier. That’s because you divide the bills and conquer them.
You can choose between setting aside part of each paycheck to cover rent, or you can pay your rent out of one check and divide the utilities and groceries up between the other checks. It also makes it simpler to plan for entertainment and dining out. You never have to give up Starbucks; you just learn how to make it fit into your budget. Maybe you only visit it on Wednesdays for happy hour or on double-star day. (Not that I love Starbucks or anything.)
You choose between the two methods by trying each. You might let your parents know ahead of time what you want to try and that you’re attempting to learn how to handle the adult world of financial management. This lets them know ahead of time why you might need help for one month if the method you choose does not work out for you.
Breaking up your monthly expenses with a paycheck also removes the overwhelming nature of suddenly paying for everything. When you look at a monthly budget, you might think in terms of “Ack! $1,200 for rent?!” or “Crap! $300 for electricity? Can summer please end now?” (Or winter if you live in a cold northern climate.)
Dividing expenses into mini-budgets can also help you remain organized. When you pay $240 per week, whether to yourself or to your landlord, so you have the $1,200 rent at the beginning of the month, you make life easier. Your rent still gets paid. You can do the same thing with a mortgage payment. Divide it and conquer it. The smaller amount makes it seem easier to handle. You still spend the same amount each month, but without exasperation or stress. Your landlord or bank still gets their money, and they get it on time.
How a Budget by Paycheck Differs From Living Paycheck to Paycheck
When you live paycheck to paycheck, you do what my parents used to call “barely getting by.” People who live that way have no savings account. They have yet to put money into investments or purchase stocks, bonds, cryptocurrency, etc. Each time they receive a paycheck, they spend all of it, all at once, typically to simply pay rent and essential bills. They may resort to going to a food pantry or such to obtain groceries.
While until 2019, 89.5 percent of the US population qualified as “food secure”, meaning that they could purchase groceries, the COVID-19 pandemic caused 19 percent of the US population to visit a food pantry or food bank to obtain grocery donations.
Budgeting by paycheck does not mean living paycheck to paycheck, because you also budget for savings, investment, etc. You cover more than your necessary bills with this method.
Divide And Conquer Your Bills
Divide your bills by the week they’re due. Depending on how many paychecks you receive during the month, you will make that number of mini budgets.
get paid weekly
you should make five budgets – one for each week.get paid every two weeks
will only make two budgets per month, but one budget needs to include the third week, or you will have to make three budgets. It is your call on how to handle that and you might want to try both methods for deciding how to do this.get paid in cash at the end of each day,
you can use the envelope method. With that method, you place the bills in an envelope marked for that and at the end of each day, you place the money you made in the envelope, too. You might not have a physical bill for the item, but you can write its due date down and the amount. This placeholder helps you plan your budget. Reference your monthly list of bills, so you do not forget any of the amounts due.Tips:
If you have a bank account, double-check your list and your bills against it. This helps you catch the variable expenses that might only come due twice per year or once per year, like auto insurance or health insurance premiums or a subscription to software or magazine.
Divide any large monthly bills into payments that come out of each week’s or two week’s paychecks. You make even big bills like rent manageable by doing this.
What If Your Bills Are All Due At Once?
Let’s say you moved into an apartment that requires you to pay for the water and the electricity. Bleck. Try to find an all-bills-paid apartment or house. But let’s say that no other option existed. The average US rent costs $1,320 per month. Your utilities probably cost about $119 for electricity per month and $72.93 per month for water.
Suddenly, you probably understand why your folks have repeatedly said that work is a top priority, and you must budget! When you pay for it all yourself, you gain a firsthand understanding of just how important getting it all done each day really is.
Now, that $1,355.93 probably comes due all in the same week. You do not have to pull it all from one paycheck though, if that would cause you problems. You can set aside $200 a week or $400 every two weeks, etc. Whatever works for you to pay the bill and keep yourself paid up, simply works!
You do not have to do it like your bestie or next-door neighbor or even your parents. You just have to find a method that works for you so you can pay every bill either early or on time.
Once you have all of the bills divided, look at what you have left out of each week or two week’s pay. Now, look at your monthly budget. Divide your grocery money into “bills.” Make a slip of paper for each week’s groceries. Set aside the money. Do the same for going out money which your Starbucks trips fall under.
If you use the envelope method with cash, you can easily track your spending. Otherwise, you need to track your spending using an app or a spreadsheet. Apps work better because you do not have to remember to record anything. The app does the work for you. Would you remember to log your expenses? If not, and be honest, grab our Goalry mall financial app today.
Until you land that salaried job that gets you monthly pay, you can use this budget method to keep yourself on track. You need not worry about running out of money or missing a payment due to utilizing this budget method. You can also build a nice savings account this way, since you always pay yourself first.