Stop Living Pay Cheque to Pay Cheque
Do you find yourself using most of your pay well before the next pay day?
I did also, and put together a tried and tested method for making sure that I not only covered all my bills and expenses, but left money in my account to be able to have that much needed security until the next pay day.
By making your pay last until the following pay day, you can avoid putting everyday expenses on your credit card. Using a credit card will fuel a downward spiral into debt by using your next pay cheque to pay off the following fortnights or month’s credit card bills. Ideally you want to pay off all bills and outgoing finances and have money left over for living and general savings goals.
So what is the best way to make your money last?
It depends largely on whether you get paid monthly or fortnightly, but what I am about to discuss applies largely to both groups as they can use the same logic.
Splitting your money
The best idea is to set yourself up with two accounts. Once you receive your pay cheque in full, split it in half and send half of the money directly to your other account or a percentage you can handle (60/40?).
Many banks offer high interest accounts that are directly attached to your everyday transaction account, so you should be easily able to do this instantly and rest easy that your money can be retrieved quickly and easily through your online banking.
The logic behind this method is that you are effectively paying yourself over the course of the following 2 weeks or 1 month – like having a booster shot of cash to your wallet.
Investing your money
Sometimes I find myself unable to trust myself with saving money and creating a nest egg, so a suitable investment that actually locks the money away can help.
Investments range from high risk to low risk, with different grades of returns for the amount of risk you are willing to take.
This is why I find myself using things such as Term Deposits and High Interest Accounts, as they are very low risk methods of investments, though occasionally I add to my share portfolio or managed fund if I am taking a long term view of my money and willing to let it fluctuate with the markets. If you are curious whether managed funds or shares are right for you, why not read the difference between managed funds and shares.
Saving Money on everyday expenses
When trying to make your money last, I find it can be helpful to understand your everyday expenses so that you can avoid them at all costs. These include the cost of food and items such as coffee and transport to and from work.
Why not try to cut your spending during the month so that you have money for the more important things? Eg; you may wish to go out once a week with the family, or save for a holiday in the future.
I suggest you try our the budgeting spreadsheet we spoke of last year, as this will truly help you understand your outgoing expenses.
What tips do you have for making your money last?
Share with us the ways that you make your money last over the month, I am sure there are some sneaky/smarter ways that I can’t even imagine!
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