30 Days to an Organized Life Day 27
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 faster.
Our family uses a combination of cash and checking accounts to manage our money. Every payday I have a morning appointment with myself and the checkbook when I do the following:
Check Current Account Balance
I record the direct deposit amount of my husband’s check in the checkbook register and add this amount to the current balance in our account to get our new balance. To make the calculations easy for this example let’s say this is $600.
Subtract Money For Basic Necessities
On a sheet of paper in my Budget Binder, I write the new checkbook balance and immediately subtract 10% for giving.
Then I 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 deposit + $30 in checking account – $60 giving money ($570 total)
– $100 groceries ($470)
– $25 non-food items ($445)
– $50 gas for the car ($395)
– $20 date/spending money ($375)
– $20 small “cushion” to avoid overdrafts (you may need more) ($355)
Total: $215. (I take out the cash for the groceries. spending money and non-food items on my shopping day and leave the gas money and overdraft protection money in the account.)
This leaves $355 “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 ($355 in our example) into a separate account that is used to pay monthly bills (mortgage, 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’s due. For example, our mortgage payment is $1014 so I need to save $253.50 each week in order to be able to pay the mortgage on time.
Moving the money to the second account means that I don’t see “extra” money in our checking account and go on a shopping spree. Every dollar has a specific place to go. 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
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. So, for example, the power bill is due this week so I paid $85 and then subtracted that amount from our utility category.
Another option is to pay bills that are currently due from the main account and then transfer the remaining money into the second account.
Our method of managing money works for us but it may not work for you. You do need to find a system that does work, however. 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.
Directing each dollar from your pay to a specific purpose will bring you peace and enable you to take control of your finances.
I have a printable Monthly Paycheck Planner that you can add to your ePlanner. Tap HERE to print a copy.
Today’s 10 Minute Task: Spend 10 minutes planning your next paycheck. Think about your long term goals and try to incorporate them into your plan. If you’re in a bad financial situation right now read How to Handle a Money Crisis here.
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