- Get a paycheck
- Pay the bills that are due
- Use what's left over for spending money until next payday
- When money runs short between paydays, use credit cards
Your everyday money
- Receive income
- Pay for out of pocket expenses (spending money)
- Pay bills
- Manage credit cards
- Set aside sinking funds
- Set aside short and long term savings
These are the basic elements of anyone's everyday money. Without exception, these six parts apply to everyone regardless of their level of income.
When you are living paycheck to paycheck, typically not all of the six everyday money elements come into play, nor are they done in the optimal order.
3. Pay bills
2. Pay for out of pocket expenses (spending money)
4. Use credit cards
Changing money habits
1. Sync income and outgo
- On the 1st you pay all bills that are due on the 1st through the 14th.
- On the 15th you pay all bills that are due on the 15th through the end of the month.
This twice monthly bill paying schedule gives you a solid foundation for also planning the other five parts of your everyday money as shown below. The Look Ahead page in Income Companion is where all of the money events in your Incredibly Cool Budget are automatically scheduled twice monthly. (The "New cushion balance" row is your bottom line that shows you if there are any coming shortfalls (e.g. in the 9/15/2020 column) that might need attention before they become immediate problems.)
2. Ignore paydays
With your bills scheduled for payment twice monthly, when you get paid is no longer important. What matters is how much money you will have available on the two days each month when you pay bills.
Income Companion automatically calculates and schedules your expected income receipts. The AutoDeposit feature alerts you when a receipt is due by displaying the Deposit dialog box at right when you start the program. After verifying that the deposit amount is correct, two clicks records the deposit. (The program maintains the transaction register for your checking account.)
The "Expected to be available" row in the above Look Ahead graphic shows the total in each column of:
- How much on hand, non-earmarked cash is expected to be in your checking account,
- How much cash has been earmarked for specific bill and credit card payments, and
- The total of all expected income receipts since the previous column date (less any percent of income saving set asides).
3. Control spending
With a consistent allowance amount, the impact of your spending money on your cash flow becomes consistent. You will no longer be draining your checking account between paydays by spending your entire paycheck. With your spending controlled, you could begin to see two beneficial side effects.
- Since you will never be more than six days from your next allowance, you may see a decline in your credit card usage.
- You may start to see your checking account balance growing month to month.
With the allowance set asides being done automatically for each new month, my part of the allowance feature is to get our allowance each week. In the Get Allowance dialog box at right, I have all the options needed to take a week's allowance and move it where needed.
Lois normally writes a check for our full weekly allowance amount. She puts the cash in her wallet. To record the check, I use the "Amount for which I wrote a check" textbox.
If you live paycheck to paycheck and would prefer to live a more authentic money life, click here to download Income Companion: Incredibly Cool Budgeting and get started. It only takes an hour or two to add your everyday money information. In that amount of time you will begin to see, probably for the first time ever, a clear picture of your future cash flow. That's a powerful picture that can help you find and make any changes in your spending plan that will bring your plan more in line with your dreams and goals.
Making the changes in your money habits as discussed in this post will come to you naturally when you start using the only software product on the planet that works the same way your money works. Within three months of using Income Companion: Incredibly Cool Budgeting you could be well on your way to living the life you love with a money management tool that will support you all the way from now to retirement and beyond.
So ... are you ready to stop living paycheck to paycheck? The ball is in your court.