Why is there so much month at the end of the money?!

Aren’t most of us LIVING for payday?  The money comes in at last and now you can celebrate, treat yourself to a night out, buy that stuff you stuck in your shopping basket in Amazon and generally feel like you’re in the money?

The bills get paid, money gets siphoned off, and then maybe a week or two in, you’re not feeling so flush.  Maybe for some people the money runs out just a few days or so before payday.  Enough to feel uncomfortable.  But for others, it runs out way faster, maybe just a week or two into the month.  Much more uncomfortable.

You’ve looked forward to payday but there’s always too much month at the end of the money.

Are you living from paycheck to paycheck? Stop! Imagine what it's like to have money on the 29th of the month?!

Most of us live like this!

Until not too long ago this was my life, even though I had a budget.  And it’s loads of other peoples’ lives too.

According to a recent article by CNN, 76% of Americans are living paycheque to paycheque, and, according to CBC, 63% of Canadians ditto.

In the UK 37% of working families would be unable to cover their housing costs for more than a month if one partner lost their job (stat from Shelter, the homeless charity).

It’s not just people on low incomes either.  People often live just beyond their means, no matter how much income they’ve got coming in.   In fact, one in 10 Americans earning over $100,000 a year is living for payday (source: CreditLoan).

Are you living from paycheck to paycheck? Stop! Imagine what it's like to have money on the 29th of the month?!

Breaking the habit

It’s not easy to break this habit.  And I am guessing not all of the ways I suggest below will work for you.  We are all different – I am the kind of person who works well with to do lists, post-its, spreadsheets.

If you are not a “listy” kind of person, then maybe you’re going to have to work with whatever method best suits you.  I’ll try to suggest a few things and then you can try out whatever appeals.

So here are a few pointers for not running out of money before the next pay packet comes in.

How to stop living for payday

1.  Work out what you are going to spend the money on before you get paid.

Otherwise known as a budget, although I don’t want to put you off by calling it that if you are budget-phobic.  Maybe a “Money Plan” is a less geeky name.

It’s good to have a plan.  You plan your holidays.  Explorers plan how to get to their destination.  Businesses plan how to get more income and grow.  Criminals plan their heists.  Whatever you want to do, having a plan can help you work out how to do it and the same goes for planning how to not run out of money.

Are you living from paycheck to paycheck? Stop! Imagine what it's like to have money on the 29th of the month?!
Plan your month like George Clooney would plan a heist.

 

You can start simply by writing down your income.  Assuming you get paid monthly or weekly, just write a total down for money coming in over a month.

Then you just write down everything that HAS to go out – like the rent/mortgage, everything that SHOULD go out – like direct debits or standing orders you’ve set up, and everything that you would LIKE to spend on clothes, eating out, fun stuff etc.

If the total of things you are spending your money on is less than the income total and you can stick to that list, you’ve cracked it!

In truth, the chances are you spend a lot more than you think on all sorts of bits and bobs, so to really get to the bottom of your spending you should probably look at everything you spent last month and see where the money disappeared to.

But if that’s too forensic for you, just start your plan by working out what to spend so that you can keep it within what you earn and take it from there.

 

2. Work out why you’re doing it.

What’s your motivation?  Mine is ditching my credit card debts and once I’ve done that I want to invest more money to create more income.  I’d like to start to do that in a year, so I have to pay off debts quite punchily.  If I don’t have a spending plan, the debts take longer to pay off because I fritter away money on other less important stuff.

Equally I want to enjoy life.  I’m not living like a monk and I need to enjoy the now as well as the future.  But the hedonism and bugger it mentality of my twenties isn’t right for me anymore.  I’d rather cut back a bit and enjoy my treats as and when I can indulge rather than at the drop of a hat.

How to stop living for payday

3. Stop buying willy nilly

Buy stuff you need.  Buy stuff you really really want and will want next month, next year, maybe even in the next five years.

My son is five.  He likes to buy stuff as soon as he gets his pocket money.  Before he got pocket money I used to get badgered to buy him magazines for the crappy little plastic toy on the front.  After he started to get pocket money, I told him he could buy his own, but then that would be all his pocket money for the week.

He soon realised that an hour or so (MAX) after spending his pocket money, either the plastic toy would break, or he’d understand that it was a piece of toot and now he had no pocket money left and had spent it all on something that seemed great at the time but actually brought him very little joy.

I was very proud when he decided on his own that he didn’t want to buy magazines for the toys any more.  He still spends most of it, but not always, and usually on stuff he gets more enjoyment out of.

How to stop living for payday. Imagine what it's like to have money on the 29th of the month?!

Spending is like a drug – do it mindfully…

It’s not just 5 year-olds.  I do it, we all do it.  Apparently buying things gives you a little dopamine hit – so consumerism is something that we get a little mood boost from whether we like it ideologically or not.  People who’ve really nailed frugality manage not to buy stuff all the time, but it takes time to get out of the habit.

I’m not sure what the answer is for you to stop buying stuff you don’t need.  You have to figure out your own motivation and triggers.  Some include:

  • promotional emails from stores (unsubscribe),
  • stress (be aware of your buying habits and perhaps try to relax before clicking BUY)
  • rewarding yourself (maybe set aside a reward fund).

My motivation

For me working out that if I went a couple of hundred pounds or more off budget, it led to me putting things on a credit card to get through the month was enough motivation to want to crack down.

Overspending is totally counterproductive to my big financial goal. The goal is to pay down my credit card debt.  I now have my main credit card in a block of ice in the freezer to remind me to find any other means possible before trying to use it.

How to stop living for payday. Imagine what it's like to have money on the 29th of the month?!

4. Get an app

I use Money Dashboard, but there are a plethora of different apps out there that track what you’re spending your money on and how much.  Money dashboard invites me to check in once a week and review my finances.  I can see quite quickly what is getting spent on what categories.

 

5. Bank with a modern bank

Some banks are pretty damn revolutionary these days.  I recently got an account with Revolut and it’s rocking my world.  Revolut is a pre-pay card that I originally got because it has excellent exchange rates for spending abroad.

However I’ve become addicted to using it in the UK because whenever I spend on it, it just pings a message to my phone telling me.  I can just quickly log in and see how much I’ve got left and like Money Dashboard it sums up what I’ve spent on categories such as food and travel.

Because it’s pre-paid I’ve now just pre-loaded it with all the money I need for food and travel in a month.  I can keep tabs on what’s been spent, knowing that I can’t overspend because there is no credit or overdraft.  It’s a pre-paid card, so like having cash but with the convenience of chip and pin or contactless.

It’s really helping me to not overspend and because I have designated that account for  food and travel, that money is ring-fenced and won’t encroach into money for anything else.

 

6. Beware the little spends for they are the undoing of us all

Coffee, magazines, little bits of stationery, products.  Going to Boots (fine purveyor of toiletries, makeup, meds and skincare) is my nemesis.  I used to find it physically impossible to go in without spending at least £15.  This stuff can whip through your money as fast as a cat o nine tails because you don’t even register you are spending a couple of pounds or dollars here and there.  But they all add up.

Shopping is not a hobby.  Most of the time it’s not even a necessity.

Stop living for payday and have money at the end of the month!

7.  Get out of debt

If you have debt repayments every month, imagine how it would feel if all the money that went into your account was yours to allocate how you wished.

Work out a plan to get out of debt and have all that income go back to you.

It might take a while -work out when you will be debt free and see if you can shave extra time off that by (a) earning more or (b) saving more.

 

8. Boost your income

Earn more and then use that to either pay off debts or invest in something that will make you money.  Could be stocks, property, business.  Get some professional advice if this is not your forte.  If you are very risk averse, make sure your investments reflect that, but try to take the plunge to invest as well as save because the returns can be much better than the small amount you earn from savings interest.

 

9. Have an emergency fund

It is very hard to have money at the end of the month if an emergency happens and you have to fund it from your income.  It can knock your fragile balance for six.  I read a really fascinating article about how most Americans would not be able to cover a $400 emergency without borrowing money.  LINK

No matter how much money is coming in, there will always be unexpected events that could cost a lot of money.

I will let you in on a little secret.  I am only just building up an emergency fund now.  My partner and I were discussing extending our warranty on our slightly cantankerous dishwasher and I suggested we start an emergency fund instead to prepare for its inevitable demise.

Better late than never!

Things break. Cars break down.  Taxes have to get paid.  Homes get redecorated.  These “emergencies” are just facts of life but you don’t always know when they are going to happen.  Solution: have an emergency fund.

Start by saving $1000 and then work up to 3 then 6 months of your income over time.

Imagine you had 6 months income saved???? You’d feel pretty bulletproof, non?

 

10. Don’t overestimate what you need to be happy.

Less stuff rarely makes people as unhappy as they expect.  You don’t need a cinema-rivalling T.V, a super posh car or the latest iPhone.  You don’t have to go crazy – buy a car, just don’t buy it new and keep it to the minimum of what you need to get from a to b and that you won’t hate to drive.

Buy for yourself and not for what other people think.  Most people couldn’t care less what phone you’ve got because they’re too busy worrying about what phone they’ve got.

Stop living for payday and have money at the end of the month!

11. Declutter

Now here’s a strange thing.  Last year I bought Marie Kondo’s book SparkJoy – the life changing art of tidying up.

Hear me out…

She’s mad as a box of frogs yet deeply wise.   Her take on stuff you own is that you should only keep things that “spark joy”, hence the title.  Anything else you should thank for its service and get rid of it.

As advice goes, it’s radical, but I gave it a bash and got rid of a tonne of stuff.  And do you know what happened?

I dramatically cut down on the amount of new stuff I bought.

When your mindset is to take pleasure in the very best things you have and no more, it stops you wanting to just mindlessly buy stuff.  I don’t want more skin cream because the one pot I have is my favourite and I like it and I don’t need to buy three more  pots of a different brand because they’re on a special deal.

Same with clothes.  I threw out a load of stuff I never wear and now I just have things I love.  If I buy new, it needs to be stuff that I REALLY like because I don’t want to have to throw it away again.

I wasn’t even that good at chucking stuff out, there is still way more to go. But it was a great exercise in driving home that the vast majority of stuff we accumulate is not the stuff that is making us happy.

How to stop living for payday and have money all month long!How to stop living for payday and have money all month long!

12. Be patient

If you are used to overspending, cutting back is not easy.  Think dieting but with money.

It’s easy for the eyes to drift off the prize and onto a meal out or a splurge on something.

Budgeting is not second nature to most people.

Being that forensic about money is not second nature to most people.

Don’t worry if it takes time to crack.  You are trying to change your mindset, your habits and turn around something that takes time to complete.  It is really worth it for the end goal, but if you stumble along the way it’s OK. Just pick yourself up and keep going.

How to stop living for payday and have money at the end of the month!

Are you living from paycheck to paycheck? Stop! Imagine what it's like to have money on the 29th of the month?!