Living paycheck to paycheck often has a negative connotation—but it doesn’t have to. It can be a chance to change our money mindset and make money a priority. Whenever payday comes, it’s a chance to check in on our financial picture, make positive changes, and set new habits. Payday routines are important, regardless of whether your paychecks come in regular intervals or if your income streams are less predictable.
1. Check your pay stub
It’s easy to skip the basics, but this simple step is a really important one we often overlook. Paycheck amounts can fluctuate by a lot of factors. Even though we have a fairly fixed salary, taxes rates, retirement contributions and benefits expenses all can affect how much our pay rate changes.
Freelancers know this well. Invoices should be matched back to income streams as soon as possible. This will help to catch errors quickly, and ensure that accounting is on the right track. This is even more important if your income is less frequent. We often take for granted that the layer between our gross and net income is humming along just fine and don’t check in on how these things change from month to month. It’s important to understand any variances and know if you need to make changes to benefits, withholdings, or retirement contributions.
2. Check out automatic transfers and payments
Automating my savings and investing has been one of the most helpful changes I’ve made to my financial wellness. These actions will last longer if you put less effort and time into them. I have all my transfers to savings, investment accounts, as well as debt bill payments, ready to go on payday. That way, by the time I’m reviewing my finances on payday, a number of transactions I was expecting has already taken place.
I’m also trying to better understand what I call my “micro-bills.” These are those smaller expenses like recurring app payments, streaming services, or memberships. They add up and can be hard to find a way to “group” or think about in aggregate. Truebill and other recurring-payment analyzers can help you see recurring payments more easily. Some will even help you take the first step in cancelling the ones you don’t use. I use payday review subscriptions to cancel any unneeded charges.
3. For any unanticipated charges, scan my accounts
The more digital the world becomes, the more likely we are to expose our payment tools for fraud or unexpected charges. I’m pretty cashless (especially nowadays), meaning my account ends up littered with small dollar expenses. One $10 charge here for lunch, $2.75 for coffee—these are easy to glaze over, especially if I don’t give them a proper review periodically. To protect myself from fraud, I scan my bills biweekly to ensure that I am aware of all charges.
You should also make sure you take advantage of the latest automatic alerts provided by your bank or credit union. It’s now pretty easy to tailor spending notifications, so you can get a quick text or email if a charge falls outside the parameters you specifically set.
4. Find a job that pays every dollar
Sometimes called “zero-based” budgeting, on payday, I find a job for every dollar I earn. This is how it looks for me: I know that my savings and investment payments come first, followed closely by my bills. What’s left is not only “fun money” but also money that gets allocated toward smaller spending goals, like a closet investment piece I may be saving for. I might also decide to pay more of my paycheck to any debt. This is easier if I only have two weeks to think about and consider any unplanned expenses.
If you feel overwhelmed by a monthly budget, a paycheck to paycheck view of budgeting is a good option. This can also work well if you’re in a home with multiple income streams. It might feel easier to save a portion of each paycheck for large expenses like rent than to save your entire paycheck.
Manage a freelance income
Payroll management is different for freelance friends. You are in charge of your income streams. You might consider increasing the frequency with which you manage your paydays. You’ll also have to do more legwork managing your freelance finances, taxes, and other longer-term savings or expenses. In this case, it’s even more important that you have a team of financial professionals that can advise you.
Unpredictability can mean that you may need to have a larger emergency fund. You may need to take a longer look at your expenses and budget, and consider how seasonality can affect your revenue and expenditures. In the short-term, make sure you consider taxes and expenses for every inflow. It can be so easy to think you’ll “put the next” check toward your big expenses, especially when you’re first starting out. From day one, treat your work like a bustling company.
Source: The Every Girl
