30 Days to an Organized Life Day 24
How did your 10 Minute Paper Pile Fix go?
Today we’re talking about organizing your money by planning your paycheck. Having a specific plan for what you do with your money each pay period will enable you to save more, spend more wisely and reach your financial goals.
Our family uses a combination of cash and checking accounts to manage our money. Every pay day I have a morning appointment with myself when I do the following:
Check Current Account Balance
I check the direct deposit amount of my husband’s check and the current balance in our checking account. To make the calculations easy for this example let’s say the current checking account balance is $600.
Subtract Money For Basic Necessities
On the paycheck planner in my Budget Binder, I write the new checking balance and subtract the money needed for basic necessities for this pay period from the balance. In our example the math looks like this:
current balance: $600
– $125 groceries
– $15 non-food items
– $80 gas for the car
– $20 date/spending money
– $20 small “cushion” to avoid overdrafts (you may need more)
Total: $260. (I take out the cash for the groceries. spending money and non-food items on my shopping day.)
This leaves $340 “extra” in our primary account.
Transfer Money to 2nd Account
You can read more about Why We Have Two Checking Accounts here but basically every pay period I transfer our “extra” money ($340 in our example) into a separate account that is used to pay monthly bills (rent, utilities, car insurance, etc.) and irregular expenses (medical needs, clothing, car maintenance, etc.).
I keep a spreadsheet with the amount I need to deposit each week and the current total in each category so I can track this account. Monthly bills are divided by the number of paychecks in a month — 4 for us — so I know how much I need to save from each paycheck to be able to pay the bill when it is due.
Any additional money we make above our basic needs and the designated amounts for each category in this second account goes into our savings account to meet our current savings goals or can be spent on non-essential items like eating out, new clothing, etc.
Pay Current Bills Due
Once I’ve transferred the money to the second account, I then pay the bills that are due before our next pay period from the second account. I subtract the amounts paid from each category and recalculate the balance. This may seem like extra work, but I have found that actually hand-writing and calculating the amounts keeps me more aware of the budget and helps me not to overspend.
You obviously don’t have to plan your paycheck the way we do, but you do need to find a method that works for you. Every dollar from every paycheck needs a “job” (a designated way to spend or save it) so you don’t just blow your money because you see it sitting in your account.
There are many online services and apps that can help you do this, so find the method that works best for you and stick with it.
Directing each dollar from your pay to a specific purpose will bring you peace and enable you to take control of your finances.
If you’d like to try our method, I have a FREE printable Monthly Paycheck Planner that you can add to your 30 Days ePlanner or your Budget Binder. Click HERE to print a copy.
Today’s Task 1: Spend 10-20 minutes planning your next paycheck. Think about your long term goals and try to incorporate them into your plan. If you are in a bad financial situation right now read How to Handle a Money Crisis here.
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So my husband and i each have our own accounts and then we have a joint account for bills. Each week when we each get paid some of our pay check goes into that bill account. Do u think with our separate accounts we should budget and what’s left with put in our bill account or just budget from the bill account. We just need something. We get paid Wednesday and Thursday and we r broke by Saturday. We need help, so we can look into buying a house and starting a family.
Hi Daina! Thanks for your question. I’ll tell you what would work for us and you can decide what you want to do. Dave Ramsey says that you should never have separate accounts, but we use them for our “fun” or spending money. So all of our income comes into the main account. I leave the budgeted amounts for groceries, gas, our spending money and $20 for miscellaneous needs that come up in the main account. I transfer my husband’s spending money to his account and I take out cash. Then the rest of the money goes into the Freedom account, which is our savings for all bills, irregular expenses like insurance (every 6 months) and car maintenance. Some people call these “sinking funds”.
If you set a budget for your spending money in your individual accounts ($100 a paycheck for example) then transfer all of the extra money in each of your accounts to your bill account you can start saving that extra money instead of spending it. You could also do an automatic withdrawal from each individual account to a savings account.
I am so happy to have stumbled upon your blog post about budgeting. I was just telling my husband that we have to get back on track and that we need to keep a record of every penny spent. This is perfect. Thanks!
So happy Andrea! Thanks for letting me know. 🙂
Can you tell me how you add to your retirement account to make sure you have enough in your later years? I am always afraid there will be nothing to live on…
Can you tell me how you add to your retirement account to make sure you have enough in your later years? I am always afraid there will be nothing to live on…
Great question Christina. My husband and I both have IRA accounts. Mine is funded primarily by money I earned when I taught school and very little has been added to it in the past few years.
Ideally retirement savings should be a regular part of our budget but it is not right now because we are still building our emergency fund. Hopefully very soon we will get to that step in financial planning. You are very wise to be thinking about it.
So true Elise! I take out our grocery, spending and non-food/household budget in cash too. It helps so much!
My husband gets paid every two weeks and it’s not always the same. Literally just today I was wishing someone would make a printable for me (I don’t know how. Ha!). This one is almost exactly what I need. I can just use it for two months. Thanks! I’ve been doing so good for the past month with this! I’m so excited!
Woohoo! I am so happy to hear that Tara. Thanks for taking the time to let me know. 🙂
We plan our paycheck much like yours (with 2 bank accounts, one for bills, one for spending) but we also take out our bimonthly spending (food, gas, fun money) in cash. This has helped me with not overspending and always having extra money left over. I used to justify a fast food meal here and there by saying “its only $7”, but those $7 add up quick!