A budget was one of the best tools Clo Bare used to increase her net worth quickly– but it took her a while to perfect her method and actually stick to a budget. One of the best budgeting tips she discovered is to budget per paycheck, and in this post she’ll explain why, and how to do it.
When I first started my money journey, one of the first things I did was crank out a budget.
I had tried the envelope method for YEARS. You know the one where you take out all your expenses in cash, and stuff them into envelopes so that when you run out of money in the envelopes, you theoretically stop spending money because there’s no more money left in the envelope.
No shame to the folks that that works for, but for me? I knew I needed something else, which is why I started with a zero-based budget.
I failed at budgeting for the first 3 months.
Now, it’s not like I started that zero-based budget and BOOM, was done! It didn’t magically transform all of my finances without any other work and make increasing my net worth as easy as whipping out a google spreadsheet.
I had to make mistakes, so I could alter the budget to really work for me.
And here’s my biggest budgeting tip from doing this:
Budget based on your paycheck, not your month.
I had to budget based on when I got PAID, not when it was just a new calendar month.
Often I hear people saying they can’t budget because their income is irregular throughout the month, or they can’t budget because they never know how much they’re going to make.
If you budget based off when you get paid instead, this becomes less of a problem.
So practical! So simple! But does it work?
Here’s why this budgeting tip works.
I find that budgeting based on your pay period is more effective because:
You probably have a better idea of what’s going on in your schedule for the next two weeks instead of the next month.
Because of this, your budget will be more accurate and agile and you can base it off of what’s coming up in your schedule, instead of what you think might happen over the next four weeks.
For example, as you’re making that fancy new spreadsheet for the last two weeks in February, you can check out your calendar. Oh, brunch with bae? That’ll impact my budget. A baby shower, again?! Better include money for a gift.
Oh AND it’s time to get an oil change??? *sigh and adds more money to the budget*
Again, I don’t know about your life, but for me? This made my budget much more accurate.
Easier to Manage
For me and most of my clients, it’s easier to manage two weeks worth of expenses than it is to manage an entire month.
If I budget on a monthly basis, by week three I’m running low in all my categories because I overspent at the beginning of the month and now I’m scraping by for the rest of the month.
That’s oddly stressful. And while it may help me cut back in the last week of the month, I’d rather have a more balanced approach all month long, ya know?
Which leads me to…
You can mentally start fresh every two weeks.
I looooooove a good restart. A good “ahhhh” that comes with creating a brand new budget and getting rid of the crusty old one from last pay period.
It feels good.
And when we’re on the long road to financial freedom?
We need those feel good moments to keep us going with these behavior changes.
Each time we budget, it’s a little accomplishment towards our money goals and each time we start a new budget?
It’s an opportunity to do even better.
It helps with black and white thinking.
When I started budgeting, every time I’d go over slightly in a budgeting category, I’d throw in the towel and say “Welp! I guess I screwed up budgeting for this budget so might as well just start fresh next time.”
I’d then go on a spending spree until my next budget, which would lead me to overspend my hundreds of dollars instead of just a few dollars.
Because budgeting based on your pay period is more accurate, a shorter time frame and easier to adapt, it’s a lot easier to avoid this kind of black and white thinking.
How do you budget per paycheck?
Now the moment you’ve all been waiting for….
How do you actually do it?
Well, it’s pretty easy.
Instead of making a budget for a new month, you’ll make a budget that begins on the day you get paid, and ends the day before you get paid again. For most folks that’s two weeks, for other’s it’s 15 days. Look at your calendar, and see what’s coming up– and adjust those budget categories accordingly.
Then, when it comes time to make a new one?
Using the template you got from my free money guide, you can literally just go to “file” and “make a copy” and do it all over again.
And if you get paid on a monthly basis?
You can always make a “fake” payment system that treats you as if you are getting paid twice a month.
Most employers will allow you to split your paycheck into multiple different bank accounts. You can talk to HR and ask them to put half in your checking account, and the other half in a savings account that you forget about until your next payday.
Bonus– you could even have that savings account PAY you automatically on a set day every month. Ally bank allows this level of automation, and I’m sure many others do to.
Kind of cool, huh?
If you’d like to see an old video of me creating my 2-week budget using the free template I have here, check this out and say hello to baby Clo Bare from 2020.👋🏻
Ready to take your finances to the next level?
Now, you got your budgeting on point and ready to start your investing journey too? YAY! Grab your seat in my free investing class and I’ll see you there– live 🙂 Register here.