Some things never change. Payday comes twice a month, 15 days apart. The amount is pretty rock solid, unless you live overseas and get COLA. And, like clockwork, on any day where the 15th falls on a weekend or holiday, the internet explodes with questions about when payday is.
In the early years, we had those months where we scraped by until payday, like most people have. For a few years, I was surprised when we got paid, because I was working and we were quite comfortable. Now I view payday as a challenge.
Zero-based budgeting is the way we do our finances now. Every single dollar is spent on paper (well, we don’t do paper because its 2016) before it is spent in real life. We use a modified Dave Ramsey approach and a free online budgeting program. We established categories for our money and figured out what we average each month. You know what? It works.
When the program says $0.00 left to budget, I’ve won. When the bank account has the magic buffer amount in it come the next payday, I’ve won. What have I won? The satisfaction of a balanced budget and hitting my goals. Here are some things we’ve changed to make this work for us.
Why I Strive to Live Paycheck to Paycheck: 8 Tips to balance your household budget and save for a rainy day.
- Use a program – It really doesn’t matter which program, but I like free ones. We use EveryDollar. I can set it up on my computer, plug in all the numbers, and also use the app on my phone. My husband can log in and track his spending as well, which makes it really easy to get a real time update on our finances.
- Do it together – I know, I know, our spouses are not always around. I subscribed to that theory for many years. However it really is important to make these decisions together. As a couple, we decided what we would budget for each category. From there, I do all the banking, bill paying, and rearranging. Anything that requires a purchase or transfer over $50, we discuss. It is so much easier to hold each other accountable when you make decisions together.
- Be a little bit flexible – At first, I was really worried about putting money in a category and then needing it somewhere else. But what we quickly discovered is that as long as we reallocated it and didn’t pull it out of savings or thin air, we would be ok. So, we need a little extra gas money this month, we can move it from the eating out budget or the car repair budget, as long as we keep things balanced.
- Put fun money in there – When deciding how much money to put in each place, we were both hesitant and yet stubborn about our hobbies. We each wanted to have some fun money, but we knew we had to use what was left over for that. By budgeting in money for a sitter, date night, entertainment, and our hobbies, we don’t feel robbed and we are able to continue saving for vacations and holidays.
- Open a few accounts – This one really helped us. We bank with USAA and can have several checking accounts. We have one for our household expenses, and we each have that card. Husband has one for his fun money, I have one for mine. We also have one for our specific savings, ie. car repairs, Christmas presents, clothing. That one we keep a separate budget in Excel for so we can make sure we are spending within the amount we allocated.
- Be realistic – If you’re using a budget to save for the future or pay off debt, you can often get caught up in the big numbers. You may feel the desire to scrimp and scrounge to pay it off quickly. This is fine, if you’re in agreement about it. Maybe take a month like January, where you don’t have a lot of extras and see how much extra you can save. But don’t do it every month, because just like a diet in which you can’t have chocolate for so long, you’ll give in, and it could be bad.
- Decide if cash really is the best option – Cash works for a lot of people, but it doesn’t work for us. For example, grocery money. I do 99.9% of the food shopping, so I’d have the cash for that. But what happens when I ask my spouse to pick up milk? Then he either has to come home and get cash, or use his own cash and then get my cash. He can’t realistically walk around with half of the grocery money. So multiple cards (differentiated with a letter on them) works best for us.
- Plan Ahead – Somehow our society has deemed it necessary to take a big vacation every year. And go all out for things like birthday parties and holidays. With a little expectation management, these things don’t have to break the bank. Decide in January what you are going to spend on presents the next year, then divide it by 12. Save each month. Same with a vacation. And, if you want to do something big, save for a few years. It’s very doable.
There are plenty of ways to budget and save for the future, even on a limited government income. What are some ways you do it?