If you are trying to break the paycheck-to-paycheck cycle learning to get one month ahead of your bills can improve your quality of life and reduce stress.
Additionally, it can be very difficult to track and time your bills and expenses to your paycheck schedule. Even when you can are able to do so, it is often met with shortages in meeting your expense demands for certain periods.
An example of this is if your paycheck was $1000 every two weeks and your rent was $1100 due at the first of the month. Although your total monthly income may cover your total monthly expenses, your rent bill due at the beginning of the month is more than your biweekly paycheck.
Normally, the best way to address this would be to set some money aside ahead of time from your second paycheck to make up for the additional amount you need to cover your rent when you get paid from your first paycheck.
Having one month’s worth of expenses saved allows you to bypass all of this, reducing the additional work and stress that comes with having to constantly plan and adjust for these expenses. It also provides you with a buffer, improves your on-time bill payments, and reduces the likeliness of living paycheck to paycheck.
Find out how to get one month ahead of your bills below.
What does Getting Ahead by One Month Mean?
Most people budget each month with the income they’ll get that month. This looks like paying all of your January bills with the income earned from January.
Getting one month ahead in your budget means you’re always living off of last month’s income. So instead of paying January’s bills with January’s income, you’d pay January’s bills with December’s income.
How to get one month ahead
Start with Budgeting
The purpose of a budget is to show you what your expenses are and impact your opportunity to reach your financial goals. Budgeting is the key to getting ahead and being effective at reaching your savings goal.
Calculate your monthly expenses
Your budget will help you to easily identify your savings target. Once you have your budget established you will need to calculate your total monthly expenses to determine a saving amount. Once you calculate this amount you can work towards saving up for it with the cash flow identified in your budget.
Allocate cash flow into savings
To reach your goal, you will have to include savings into your budget. If you don’t have any space for it in your current budget, you could cut costs and reallocate funds to your savings goal. Some areas you can reduce spending include subscriptions, eating out and personal expenses such as shopping.
Save two “extra” paychecks
If you get paid weekly or biweekly and have maintained a budget, you will notice that there are two months out of the year that you will see an extra paycheck. This is difficult to identify or take advantage of if you are not budgeting and maintaining a budget.
The timeline for these additional paychecks varies from year to year. Review your pay calendar. If you get paid once a week identify which months you will get paid five times instead of four. If you get paid biweekly identify the months you will get paid three times instead of two.
Once these paychecks are identified, plan to transfer the additional paychecks into your savings account.
Save additional paychecks
Any time you have an opportunity for more income such as bonuses, income taxes or raises save the additional income and allocate it towards your one-month fund. Doing this will allow you not to disrupt or take away from other spending categories.
Once you are able to get one month ahead on bills you will feel more protected. Knowing that your bills are taken care of will give you the space to work towards your goals stress-free.
Although this is not something you have to do, it is something that will tremendously improve your quality of life and finances.
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