How To Budget Your Money When You Get Paid
Tags: SEO, Investing, Money, Personal Finance, Money Management

Consider this article as the first step before hitting the road to the Billionaire Club. I know most of us are a mess and can’t stick to a budget, I used to be one of them, and I think it’s very difficult, especially in our 20’s, because we don’t know how to do it properly, because no one, nowhere taught us how to do it. When you get a budget you need to decide what happens to your money and you got to be in control of your life. So, let’s do a kind of Budgeting 101. I consider there are five primordial and smart places your money needs to go when you get paid. Which ones are those? let’s find out.

1. Your “401K” Plan

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The first place your money needs to go when you get paid it is straight to the “401-k” or retirement plan. It is a type of investment plan, which helps you to accumulate a part of your savings over a long-term period so that you can have a secured financial future. Your contributions will get deducted directly from your paycheck before the direct deposit enters into your account.

Also, as part of your employee benefits package, many employers offer to match your 401-k contribution up to a certain amount. It means that for every dollar you put into your 401-k the company will put a dollar as well. Amazing, right? 401-k employer match is free money, you should take it.

2. Open a Checking Account

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This Checking account it’s your financial hub, all bill payment and spending will happen out of there. It’s recommended to do it this way because is easier to manage your finances when it’s all centralized in one place where all the activities happen. You should open a checking account that doesn’t charge any monthly feeds.

These days everything is done electronically and most people get paid via direct deposit anyway so you don’t really need a bank with bricks in modern locations. There’s a lot of great online-only checking accounts that offer practically everything you could possibly want in a checking account.

3. Emergency Fund

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You should set up an automatic recurrent monthly transfer to a separate saving account. These savings accounts will service your emergency funds. Other high heels saving accounts. Building up an emergency fund is always step number one in personal finance because it helps you to stay out of debts and next time you get hit with an unexpected expense like your car breaks down, your pet get sick, instead of stressing of how you’re going to pay for it you just be able to deep into your emergency fund and set a putting into a credit card. It will make you feel like such a responsible adult and it’s really awesome.

A $1000 makes a great starter emergency fund, it’s very doable and it’s better than nothing, so start with one thousand. Set up an automatic monthly transfer from your checking account to the saving account and make a $100 a month that will get you to $1000 in 10 months and once you have it, you are just gonna get this awesome confidence and that will help you to crush those others budgeting goals I’m gonna talk next.

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Now it’s time to also pay your living expenses, so noticed how I didn’t start the budget by “paying your bills first”, everything until now was putting money away into your own accounts, your own pockets so this is called “Pay yourself first”. You’re allocating a portion of your paycheck into your own savings accounts and then working with what left.

This is exactly how successful people manage their time. They wake up early and work with their top priorities first and that way even if the rest of the day gets highjacked their taking care of what’s most important to their goals first. So that’s exactly how it is with money as well.

4. “Needs vs Wants” & No Retirement Savings Goals.

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The important thing here is to distinguish needs vs wants. So groceries like rice and vegetables are a need but a five-dollar kale chip is a want. A monthly subway card to get to work is a need but Uber rides is a want.

No retirement saving goals or “short-term savings” are things such as a trip that is coming up, a coming wedding that you wanna go to or saving for a house. You should do it like high heels savings accounts as I mentioned earlier, start doing an automatic transfer of $200 a month for example into that savings accounts so when you need to use it you have the cash there. Don’t use your credit card to pay later, it’s better to transfer to the credit card the money that you already have for that specific plan.

5. “Guilt-Free” Spending.

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This is my favorite part, you can spend whatever is left in your checking account guilt-free. You can go to fancy dinners, you can buy designer shoes without getting that heavy feeling in the pit of your stomach. Most people end-up buying whatever they want anyway but the difference is that they are putting in a credit card or just doing something that will compromise their financial goals but if you put your money where needs to go first because you follow this budget then you can relax and feel good about spending your money.

That’s why learning how to budget this way by “paying myself first” was a total game-changer. And what ends up happening I don’t even spend everything usually so I can just let that extra balance roll over to the next month and keep accumulating so eventually I have cash enough to spend on something nice to myself, again, guilt-free.

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