How do you manage your pay check?

by Kristina on October 10, 2013 · 5 comments

Good morning Dinks.  Let’s talk about my favourite subject…spending money.  As you know I am a reformed spend-a-holic so discussing how we choose to spend our money is near and dear to my heart. Now that I am more financially responsible I still like to know how other people are spending their money.  I know that I got into debt by spending carelessly on things that don’t matter such as clothes, restaurants and vacations.  Now that I manage my money wisely I spend money on groceries, household items and things for our apartment.

One of the major habits that I changed after I decided to live financially responsible was the way I paid my bills.  I used to pay my bills in full as soon as I got them – which I couldn’t afford to do.  So then I ended up using debt to live until my next paycheck because I spent all my money on paying bills.  This was a really bad financial habit – only I didn’t know it at the time.

Afford to manage your money

Now I don’t pay all my bills with one pay check.  Now I split all my bills down the middle and pay half of the total amount each time I get paid.  It’s much more manageable and it fits nicely into my budget.

My budget also changed greatly over the years.  I used to think my budget was the amount of my paycheck and I spent it until the money was all gone, this was usually within a week.  Then I would live on credit for the next week until I was paid again.  I don’t have to tell you that this was a really bad financial habit.

Set good financial habits

Now I set aside a set amount (percentage) of my paycheck for food and housing costs, I include an amount for savings into my budget and then I spend the rest on personal items and entertainment.  I also like to keep a floater amount (a minimum) in both my savings and checking accounts in case of an emergency.  I know that I could save even more money for my short and long term goals, but I choose not to.  I save what I think is a good enough amount and I enjoy the rest of my money.

So many reformed spend-a-holics go to the extreme once they see the light.  They go from always over spending to never ever spending a penny more than they need to.  I could have gone this route, but I am grateful that I didn’t. I did not take that extreme measure because I still like to enjoy spending my hard earned money on nice things.  The difference is that I now spend my money on things that are worth the cost like nice vacations and quality furniture for my home etc. I don’t splurge very often and I always second-guess my purchases before I make them.  I don’t want to work hard and not be able to enjoy the fruits of my labour – so I spend moderately while saving at the same time.  I guess I found the perfect balance between spending and saving.

Photo by orphanjones

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{ 5 comments… read them below or add one }

1 Simon @ Modest Money October 10, 2013 at 8:42 am

In a key way, your budget has something in common with mine. As much as am working towards a couple of crucial financial goals such as building up my emergency fund and savings, I also like enjoying the money with loved ones and I’ve taken to including such enjoyment into the budget. Before I just used to splurge, now I do it with a plan. I figure, whats the use of money if I can’t have fun on it once in a while, I mean who knows what we’ll wake up to tomorrow.
To differences: While you split your bills in half, I have lagged mine such that the due dates come at different times when I can then manage to clear them in full one at a time. It does take a bit of negotiating to score some of the agreements but its totally worth the effort.

2 dojo October 10, 2013 at 10:36 am

We keep current with our bills (since otherwise all the extra-payments would be pretty nasty) and also make an effort to save each month. In the past years we proved to be better with saving/not spending and I hope we can remain at least as responsible as we are now.

3 Jen @ Frugal Rules October 11, 2013 at 4:30 am

Looks like spending one’s paycheck within the first week or so from receiving it and living on credit for the remaining days until it’s payday again has become a common thing. I can completely relate to this scenario so now I am working on changing that before it’s all too late and I am unable to save enough for the so-called rainy days. Not that I am expecting it to come anytime soon as I am still in my prime but I guess nothing could be better than being prepared. What did you call it again? Finding the perfect balance?

4 Kathy October 11, 2013 at 9:40 am

Before we retired, we got paid 2x a month. One check went toward mortgage and a few smaller bills and the second check went toward utilities, insurance, food, etc. We had a little credit card debt and I was so anxious to pay it off that I put huge amounts toward it each month. But then I would always end up short of cash and have to charge an unexpected expense. When we retired (with no credit card debt) we started getting our pension once a month and I was very afraid as to how I would handle that change. It actually worked out better because we have all the money available at the beginning of the month.

5 Kristina October 11, 2013 at 6:26 pm

From reading your comments I see that everyone’s budget is different and that’s a good thing. Our budget doesn’t necessarily have to do only with how much money we make and what expenses we have, it also has a lot to do with what we are saving for and our personal goals. Thanks for sharing everyone.

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