You will get a lot of money management tips on the Internet. This is, after all, one of the most important things that you need to learn to do. Most of the time, people become financially successful, not because they earn a lot of money. It is mostly because they knew how to use their money wisely. They learned how to manage their finances so it can help them grow their personal net worth.
While financial management involves simple concepts, there are times when it becomes harder because of a certain circumstance. One of them is getting your income once a month. According to reports, 7 out of 10 American workers tend to countdown to payday. These are the workers who receive regular pay but find themselves living from paycheck to paycheck.
Now, this can be solved if you only budget your money. Now if you are getting your paycheck twice a month, that means you only have to budget for two weeks. That is easier. But what if you only get your income once a month? Would that be harder or easier?
That actually depends on you. Some people might find it harder to budget because they cannot control themselves. When they get their income, they feel like they are millionaires. It makes them reckless. By the last week of the month, they are barely surviving on what is left of their income. This can increase the chances of borrowing money just to survive the whole month.
How to manage an income that comes once a month
Without a doubt, you will need a different set of money management tips if you are getting your income once a month – as opposed to getting it two times. Here are the important tips that will help keep your finances secure and stable despite coming in only once a month.
Pay bills at the same time
Paying your bills should be a priority. It does not matter if it involves your rent, utility bills, or debt payments. You need to prioritize these fixed payments over the discretionary expenses. Anything that involves payment to another company or institution has to be met. This will keep negative records from being put into your credit report. Now if you only get your income once a month, you may want to get in touch with these companies and ask them to move your due date. That way, all your obligations will fall under one due date. Ideally, you want to move date near the time of the month when you get your paycheck. This will make it easier for you to meet the monthly payments. Your obligations will not be forgotten because they practically fall on the same date.
Use cash for discretionary expenses
A lot of Americans are no longer used to carrying cash around. If they do carry cash, it is not a big amount. In fact, 76% of those who admit carrying cash only keep less than $50 in their wallet. But if you want to make your money last until the end of the month, it is better to use cash. It is said that paying in cash is more emotionally felt – making you more hesitant to go through with the purchase. So how will your cash-only budget work?
Once you have paid off your bills, anything that is left is what you will use for discretionary expenses. You need to make sure that this will last until the end of the month – thus the need to use cash. While you can use your debit card to access this money for purchases, it is more ideal to withdraw everything and use cash instead. You can use the envelope budgeting system to make this work. Label it with the usual categories and hold on to every envelope only when it is needed. Spend what is in each category. If you run out of cash, then you stop spending. This is a great way to keep you from overspending.
Divide the categories into weekly amounts
Sometimes, even if you use only cash, there is a chance that you will spend everything in one go. One of the best money management tips to avoid this is to divide the amount according to how much you will spend every week. For instance, if your budget for groceries is $500 a month, you only use $125 per week. Only carry $125 with you when you do the grocery for the week. You do it for the rest of the month. That way, you will be assured that money will be left until the 4th week. If there are 5 weeks for the month, then set aside for 5 weeks. Do this for all the categories that you consistently spend on until the end of the month, like transportation, gas, etc.
Have an emergency fund
This is the best of the money management tips that will allow you to secure your finances. If you are scared that your once-a-month income will not last, you need to have an emergency fund for unexpected expenses. After all, you are practically living from paycheck to paycheck. All it takes is one broken transmission or a trip to the ER to put you in debt. What makes this more dangerous for those who get their income once a month is that it can quickly deplete your financial resources at the beginning of the month. You have a long time to wait until the next paycheck. Your emergency fund can help tide you over until then.
But how do you save up for this? Well, you need to make sacrifices for a couple of months to build this up. Start with a small amount and be consistent with it. Soon that will grow into a significant amount – at least enough to save you from small emergencies. You can also commit your tax refunds, bonuses or commissions and put them towards your emergency fund savings.
Remember all these money management tips so you can make your financial position more secure. A once-a-month income is not a problem as long as you know how to handle your finances properly.
Things to consider when managing your money
If you want to manage your finances properly, there are a couple of rules that you need to consider. These will help you make your financial position more secure and stable. There are three specific things that you need to look into as you implement money management tips.
Always keep the future in mind
The truth is, you are managing your money for your future financial security. In fact, effective financial management can even help you save money even if you have a low-income. But as you make decisions about how you will manage your finances, it is always important to remember that it will affect your future. That means you need to have a good grasp of what you want your future to be like. What way, your decisions will lead you to that intended future.
Be realistic with your goals
In order to achieve the future that you want, you need to set goals that will lead you to it. While this is important in any money management tips, you should also be careful in making it as realistic as possible. It may be true that challenging yourself is always a good idea – but that should not lead you to frustrations. When setting goals, it is very important to analyze your financial capabilities and your current lifestyle. High goals make can motivate the achiever in you but it can also be tiring and frustrating. So set goals but make it realistic so you will not end up feeling miserable as you try to reach the future you want to have.
Leave room for what makes you happy now
According to a study, most Millennials prioritize their happiness over their career. That means there is a better chance that they will forego a high-income if they know it will make them miserable. You might want to take a leaf out of their book. Your future is important but it so is your current life. Do not sacrifice too much of the present just to reach a future that is very ambitious in the first place. Find the balance between being responsible and pursuing your happiness.