Money

How To Budget When You Get Paid Monthly

You know the drill: it’s pay day and all of a sudden you’re channelling Fat Joe in the ‘Make it Rain’ music video clip and living like you’re Queen B. Fast-forward two weeks, and you’ve suddenly gone from dining at Heston’s to eating two-minute noodles every night.

The dichotomy of living like a king or queen for a fortnight and a pauper for the remainder of the month is a familiar scenario for almost anyone who gets paid on a monthly basis. But living on a monthly pay cheque doesn’t need to be the financial bane of your existence if these simple budgeting strategies are applied.

#1 Align Your Payment Dates

To avoid the stomach-churning realisation that you’ve whittled away all of your hard-earned dollars on smashed avocado brunches and tickets to summer music festivals rather than paying your rent, set the payment dates for any fixed expenses (mortgage or rent, utility bills and insurance) as close as possible to the date that you get paid.

If moving payment dates isn’t feasible, move the money for any fixed expenses into a separate bank account that can’t be easily accessed.

Michelle Tate-Lovery, Director and Principal Financial Adviser at Unified Financial Services, suggests employing the following strategy: “Plot your fixed expenses, as some months may be higher in fixed expenses, some months lower… It is always good to have a float for your fixed expenses, i.e. set aside some savings to provide a buffer for those higher fixed expenses months (to avoid playing catch up).”

#2 Stick To A Budget

The word ‘budget’ doesn’t tend to light fire in people’s bellies so much as ignite fear. The YOLO mentality that has become characteristic of Gen Y means that placing restrictions on our lifestyle doesn’t always come naturally.

“Budgeting doesn’t necessarily mean going without – it starts with understanding what you earn and it is your choice as to where you spend your money. It is more about awareness”, says Tate-Lovery.

“The biggest derailer of a financial plan is [your] own behaviour. Dividing [your] goals between short, medium and long term, and therefore [your] savings between these different timeframes, means that you are practising delayed gratification. If the goal is worth it – you will do it.”

To minimise the chances of burning through all of your cash within the first week of getting paid, draw up a weekly budget for each category of discretionary or variable expenses, such as groceries, transport, entertainment and miscellaneous.

Budgeting requires taking a long, hard look at your spending habits and calculating just how much you’re actually spending on those skinny soy lattes every morning. Track your spending using a spreadsheet or app, such as TrackMySPEND, so that you can create a realistic budget, know how much you can comfortably set aside in savings and are aware of which categories you need to cut back on in spending.

#3 Show Me The Money

It’s easy to lose track of how much money you’re spending if you’re paying for everything on plastic.

Instead of relying on your debit or credit card, withdraw the amount of money that you have projected to spend on a weekly basis, so that you can visually see what is coming out of your wallet.

You may even want to consider taking up the tried and true ‘envelopes method’ in which allocated amounts of money are placed inside envelopes labelled according to their categories.

It’s amazing how much more disciplined you become when you can see just how quickly the cash is disappearing from the ‘entertainment’ envelope.

broke budget monthly income money

#4 Have An Emergency Fund Ready

Needless to say, things don’t always happen as we anticipate and you may unexpectedly encounter additional expenses in a particular month. Hopefully, you’ve set aside some savings for a rainy day, as it never hurts to be prepared for the unknown.

Revisit your budget and assess how much can be comfortably put aside in savings. It doesn’t matter if it isn’t a huge amount ­– every little bit helps in the accumulation of wealth.

Being paid on a monthly basis doesn’t have to be a negative and, in fact, it might work in your favour. “People who receive their income on a monthly basis have a great opportunity to develop really good money habits”, Tate-Lovery says, “Starting off with managing their cash flow and doing a budget, [and] planning ahead what they are [going] to spend. Cash flow is king.”

“Spending the time in getting this area of life right will hold them in good stead [in building] a robust wealth plan for their future. If you are able to have a surplus each month and save, then you are able to invest for the long term and that’s where the magic happens. When you stop living from pay packet to pay packet [and] get your budgeting spot on, you will be well on the road to financial independence.”

Say goodbye to your days of being a part-time pauper.


Camha is a freelance editor and writer currently based in Perth. She is a wannabe word nerd, travel-addict and coffee enthusiast, and thinks that life is just one big Seinfeld episode (where Elaine is her BFF). She has written for Broadsheet, AWOL, The Big Bus and the Huffington Post Australia, and tweets at @curatedbycammi