Start a Paycheck Budget Routine ASAP and Get Better With Your Money
When your bill due dates start getting closer, and you are already living paycheck to paycheck, your financial goals may start to seem unrealistic. Don’t lose heart, as there are many budgeting methods you can start today to get better with your money now. What you do in the short term with your finances will only help with your long-term financial outlook.
Budget-by-Paycheck: 4 Ways To Start
When you start working with a budget-by-paycheck system, instead of a standard monthly budget, you will allocate money for your bills and necessities every week or every other week when you’re paid. You would assign each expense to its own paycheck such as utilities, rent or groceries. Here are some ways to more intentionally do a budget by paycheck:
- Break down your budget into percentages.
- Try the 50/30/20 budget rule.
- Build a budget blueprint.
- Use a budgeting app.
1. Break Down Your Budget Into Percentages
When assessing your fixed and variable expenses, instead of just spending money when you think it’s needed, you set percentages. This budgeting method works by assigning a percentage of your paycheck to each category on which you spend money. This sort of budget calendar can help with both saving and debt.
Paycheck Budget Percentage Examples
| Expense | Allotted Percentage of Biweekly Income |
|---|---|
| Housing or mortgage payments | 25% to 35% |
| Food and groceries | 10% to 15% |
| Insurance | 10% to 25% |
| Transportation or auto maintenance | 10% to 15% |
| Savings | 15% to 20% |
| Health | 5% to 10% |
| Clothing | 5% |
| Entertainment and leisure | 5% to 10% |
| Emergency fund | 5% to 10% |
2. Try the 50/30/20 Budget Rule
You don’t have to think about your monthly bills as one big chunk. It might help to break them into pieces every paycheck to pay off the debts in a more palatable way. One of the easier budgeting methods to manage is the 50/30/20 budgeting rule. There are three categories included in this method for you to allocate funds:
- Needs: 50% goes toward essential expenses like rent, mortgage, utilities, credit card bills and food.
- Wants: 30% goes towards nonessential expenses like dining out, shopping, spa treatments and travel.
- Savings: 20% goes into your deposit accounts, emergency funds, sinking funds or retirement contributions.
As all paycheck budget routines will be unique depending on your financial situation, you could split your budget into the percentages that make sense for you.
Another option would be the 70/20/10 budgeting rule. This budget breaks down your paycheck into the following:
- 70% towards living expenses.
- 20% goes towards paying off debts. If your debts are paid, this would go to savings.
- 10% is for your wants or fun items.
3. Build a Budget Blueprint
Your budget doesn’t have to be just what you spend a month. You should focus on your spending habits and how much money you put towards essentials versus discretionary expenditures. Here are a few steps you can take to start building your budget blueprint for each paycheck:
- List all your living expenses and allocate each to specific paychecks so you know they are covered first.
- Organize your flexible and recurring expenses and loan payments to prioritize paying off debts.
- Add up your after-tax income and figure out what you are actually taking home each paycheck to allocate funds accordingly.
- Set financial goals each week or every other week when you get your paycheck so you feel like the money is already spoken for and don’t spend it unwisely.
- Record and track your spending weekly so you can see where there is room for editing your expenses.
- Adjust and review your budget for growth so you can work towards something every time you get paid, even if it is just small steps at first.
4. Use a Budgeting App
Gone are the days when you used to have to balance your checkbook in the ledger by hand. With so many budgeting apps at your disposal, it almost seems counterintuitive not to seek some help from a mobile app. Not only can they budget out your paycheck, but also show you where you have room for improvement and even help you both save and invest.
Here are some popular budgeting apps to consider:
- Goodbudget
- Empower
- EveryDollar
- Fudget
- Honeydue
- Mint
- Monarch
- PocketGuard
- Rocket Money
- You Need a Budget (YNAB)
Final Take To GO
Budgeting is never easy, especially when you think you don’t have any money to spare. Instead of getting overwhelmed by your entire financial picture, zoom in a little bit to just each paycheck. This can help you allocate your funds on a smaller scale. When you budget by paycheck, you don’t wait to see what will happen at the end of the month, but rather what you can do to be better with your money right now.
FAQ
Here are some answers to frequently asked questions about paycheck budgeting routines.- What is the budget-by-paycheck method?
- The budget-by-paycheck method is when, instead of you setting a standard monthly budget, you will allocate money for your bills and other necessities every time you're paid. Each paycheck would be assigned specific expenses.
- How do I budget my weekly paycheck?
- Here are four ways you can start budgeting your weekly paychecks:
- Break down your budget into percentages.
- Try the 50/30/20 budget rule.
- Build a budget blueprint.
- Use a budgeting app.
- Here are four ways you can start budgeting your weekly paychecks:
- What is the 70/20/10 budget rule?
- The 70/20/10 budgeting rule is when you allocate 70% towards living expenses, 20% towards paying off debts or savings and 10% for nonessential items.
- What is the 50/30/20 budget rule?
- The 50/30/20 budgeting rule splits your expenses into three categories:
- 50% is allocated to needs
- 30% is allocated to wants
- 20% is allocated to savings
- The 50/30/20 budgeting rule splits your expenses into three categories:
