After about six months, I am still not used to getting paid every other week.
In my old job, I got paid once a month. That was easy, because I paid each bill once a month: one mortgage payment, one payment for each of my utility bills, one payment each for the credit cards, one student loan payment, one debit per recurring donation. And one transfer out for each savings or investment account. Simple. Automatic. Buttah.
Now I get paid every other week, and I am embarrassed to say, thinking about how to adjust to this brave new world makes my brain convulse if I think about it too hard. I am not so good with change sometimes. I would be a terrible freelancer.
I have yet to set up any direct deposits to savings accounts, or to schedule any regular transfers to savings. That sucks, because I love automating things. Plus, people who automate save more because they don't have a chance to talk themselves out of putting money aside. Since starting this job I have been scheduling all my savings and Roth buys manually, and I am probably not saving as much as I could be. I have lots of chances to talk myself out of making those transfers.
The problem, as I see it, is that the dates I get paid move around so much, but the dates I have to pay for most things don't. It doesn't seem like this should be such a difficult mental adjustment to make -- I certainly didn't expect it to be -- but for whatever reason it is. It would be one thing if I could set up a portion of every paycheck to direct deposit into a savings account, but because my major, fixed expenses (mortgage, student loan, car insurance, and parking contract for work) are clustered together and amount to nearly one whole paycheck, that won't work. I guess I could leave a bigger cushion in my checking account as a slush fund, but again. Change, I do not like it.
I guess I do now get to experience the fun of the three-paycheck month. So that's something.
How often do you get paid, and how does it affect how you spend or save?
1.14.2010
Every Other Week And My Problems With Change
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15 comments:
I had this exact problem, and I dealt with it like this. My mortgage is my biggest expense, and it's always due on the first of the month. So starting with the first paycheck of the previous month, I subtract half of the mortgage payment from my checkbook, even though the money is still in the account. After I get paid the second time that month, I write the check to the mortgage company for the full amount. Then I divvy up my other payments based on when they're due. Student loan, gas bill and any credit card payments come out of the first paycheck; phone, electric, car insurance and cable come out of the second. I have automatic withdrawals to savings accounts that are scheduled to happen every two weeks on the day after each pay day. The system gets rejiggered twice a year during three-paycheck months, when sometimes the dates I get paid don't mesh with the bill due dates, but that's better than redoing everything every month. What that also means is that the two months when I get three paychecks, that money is extra for me to spend or save, because everything is already budgeted for. I'm a giant dork, so this system works for me, but my friends look at me like I'm nuts when I try to explain it.
Nice to see you blogging again!
I'm a graduate student/part-time teacher, so money is tight. I get paid bimonthly - on the 1st and 15th -DURING the semester. In between semesters I don't get paid, so every year I go from Dec. 23 to Feb 15 without a paycheck, for example.
The biggest thing for me, in terms of managing money better, was getting away from the tyranny of 1 paycheck goes toward rent and all bills and the other goes towards everything else. Taking some money for savings out of both paychecks and working with my credit card company and loan company to set payment due dates that make sense have helped some.
I used to get paid once a week- nice, because pay day was never that far away, kind of a pain because most bills are monthly.
My solution was to add up all my monthly expenses- rent, utilities, phone bill, money to save for myself, absolutely everything, even my weekly gas budget. Then I divided everything by four, added a little cushion for months when I used more heat or took more trips than usual, and voila: that was the amount of money I needed to set aside from each paycheck. I had that amount transfered every payday to a checking account for my bills. Payments from that account were automated to go where they needed to go. Everything left in the payday account was my spending money for the week.
Once I set it up that way, I never thought about it again, and, best of all, I never had to worry about having enough money for anything. I'm amazed that more people don't do this- the thought about having to set aside an entire paycheck for rent gives me hives.
I get paid twice a month, which tends to float about a bit unpredictably (due to weekends and holidays). It's hardest when I have to go 3 weekends between paychecks!
I do it a lot like commenter # 3, Ana. I have my money deposited directly into one checking account, and then go nuts transferring out prescribed amounts to the following accounts:
bills
short term savings
travel
misc budgeted expenses
mad money
My bills account is absolutely all my monthly bills - rent, utility, insurance, school loan payment, phones, etc. I rounded up a little bit when estimating the ones that fluctuate, and put half of the total in each payday. I'm a little ahead of the game - by the 15th, I have enough to cover the next month's encumbrances.
Short term savings is my easy-to-access emergency fund. I haven't had to touch it in ages, and every time it hits 1k, I pull half out and send it to my Vanguard efund.
Mad money gets my work bonus, rebates, and $10/paycheck. I just started that account, but will use it for stupidly expensive meals I can't justify from my usual budget.
Whatever is left after all those transfers gets left in my main account (called day-to-day) and I use that for immediate cash & atm transactions.
It sounds complicated but it really works for me.
Nice to see you back!
I'm a fairly new freelancer (been at it for 6 months) who transitioned from the corporate world so I'm still getting the hang of budgeting. I get paid 3-4 weeks after I submit an invoice so when I get paid my priority is to cover my recurring bills (rent/utilities/groceries). Whatever’s left (which never seems to be enough) goes for whatever else comes up.
I'm lucky in that I have no debt and live with my boyfriend (who works for The Man and gets paid every other week), so there's a little cushion there. Even so, I have nothing in savings so my priority is to work out how to cover my bills and still put something aside for savings/retirement. Instead of piling up my invoices to get one huge chunk of change at once (very tempting but also allows for frivolous spending) I’m trying to space them so I get paid every week or every other. It truly sucks riding out dry spells where the corporate office I send my invoices to shuts down over the December holidays, for instance.
I'm sure I'll get the hang of it, I just need to do a little thinking about it.
PS: Nice to see you posting again.
I think I've mentioned before that internet banking is really very advanced in New Zealand - this country is as close to a cashless/plastic society as it gets, and personal cheques are nearly unheard of.
I get paid fortnightly and the next day everything gets transferred automatically: my share of the joint account (for rent, bills, etc), savings, loan repayments. If a payment changes or I need to modify my budget, it takes all of 2 minutes to do.
My partner, who gets paid twice a month, found that making sure we had enough funds for rent - which is fortnightly - was a bit complicated. Some months his joint account share went in before rent-day, others it went in a few days later. He's since changed his personal account to the same bank where the joint one is, and can do instant transfers online if we see we're running low.
The whole thing is still a work in progress :)
I'm with ya. It took some strategy and phone calls (mainly to my student loan folks), but I have a pretty air-tight system now. My big ticket expenses and direct withdrawals go like so:
first pay check (~30th of month): rent, gym, gas bill, Netflix, cat food/litter
second pay check (~15th of month): student loans, ING savings, Visa bill, power bill, phone bill
What always mucks up the machine is entertainment/socializing. People have birthdays and I have to drink with them. I go on a date and want to contribute. Poker night (ok, that's my own fault). Irregular expenses like haircuts and clothing also throw me for a loop, but the credit card buys me time.
Hope that helps a little.
Like thegirlwhoateeverything, I'm a grad student...except I get paid once/semester (plus once at the beginning of the summer). To say the least, it's annoying. To add to the annoyance, taxes are not withheld, so I pretend I'm self-employed and make estimated payments.
When I get paid, I put nearly all of it into my savings account. I don't really make enough to have long-term/retirement savings. Once a month I move a months expenses worth and other less regular, misc large payment stuff (student loans, car insurance)into my checking account and pay off my credit card from my savings account. It's not pretty, and not efficient...but my paycheck schedule is so disjointed from everything else in life that I'm not really sure what to do about it.
I have been paid bi-weekly (i.e. every other week), semi monthly, monthly and very randomly. Best thing to do is to start the automatics after you have an extra pay period's worth of money sitting in your checking account that you didn't spend the month before because you didn't send it to savings yet. Then act like you still get paid once a month and DON'T look at your account except ONCE a month when you balance your checkbook. If you don't SEE it, you won't think you HAVE it, and then you won't SPEND it on stuff that you haven't prioritized. The only time I had trouble managing my cash flow was when I was totally self-employed and the money came in rather randomly. And really the problem was, I was sitting on my behind not working as hard as I should have been. Being my own boss was great until I discovered that I was lousy at pushing myself consistently...heh
My credit union offers an account that requires a $500 balance. If you go below that amount, they charge you $5 per month (not per withdrawal). That is way cheaper than a bounced check charge and means I can use that account as an emergency fund. So that's where I pay bills from. Tough getting that $500, but when "close to the edge" in my account means close to $500, it's an entirely different emotional sensation from being close to paying an overdraft fee..
I get paid twice a month (which, mysteriously, is not the same as every other week), and just set up automatic transfers from checking to savings on those paydays. When my paydays used to move around, I used the first one for all my fixed expenses, and then did a giganto-manual transfer with the second one.
I wish you wrote more frequently. Your writing is amazing. I guess if it means higher quality articles, then in the end I'm happy. Maybe you could try writing... once every two weeks?
I automate as many bills as I can to my Visa rewards card, and use it for purchases. Then, I pay it off by the 20th of the next month before it accrues interest. Meanwhile my cash sits in a high yield checking account at my credit union (3% on the first $30k). That way I earn cash back on my rewards card, while earning interest on my monthly cash flow that remains liquid. Of course, this requires my own budgeting and accounting system because I can't depend on using real time cash balances to tell me my spending limits. However, since I developed our budget system, we have been able to save a lot more, and feel much more at ease, knowing exactly what our limits are. This developed out of a change in my life: going from not getting paid as a student to getting paid sporadically working several part time jobs at a time.
This is what works great for me, although it does require having at least a months worth of savings first. ALL of my deposits go into my savings account. Even little small checks. Then at the beginning of each month I determine about how much money I will need to pay bills, purchases, etc and I transfer that amount to my checking. This sets up a mindset where saving is the priority. I think most people put all their deposits in checking and then whatever is left over at the end of the month is savings, so saving is really just an accidental afterthought. My savings account has grown exponentially since I started doing it this way. And paying bills is separated from the frequency/amount of paychecks.
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