If you’re a budgeting nerd like me, nothing beats payday. I derive such satisfaction from having a budget prepared and filling each line item on my budget with the incoming money from my paycheck. Money nerd, I know. But you don’t have to be a money nerd to take control of your finances in part by learning the smart things to do after payday.
Some people may love payday because they have money to buy all the items they’ve been waiting to purchase. They feel they can also let loose and have a night or two on the town. However, before you do that, take these more important actions with your money.
4 Smart Things to Do After Payday
Getting control of your finances isn’t difficult if you follow these steps:
Pay Your Bills
The first thing you should do is pay all of your upcoming bills.
If you get behind on paying your bills, you’ll likely face late payment charges, which can make your financial situation worse.
Also, repeated late payments will lower your credit score, which means you’ll have a harder time doing things you need to do like rent an apartment, buy a car, or buy a home. When you buy a car or home, you’ll have a higher interest rate on your loan than someone with a higher credit score.
Pay your bills on time to make the most of your money.
Set Aside Money for Irregular Expenses
Some bills aren’t due monthly. Bills like property tax and car insurance are usually due every six months and may cost several hundred to several thousand dollars. If you try to pay those bills the month they’re due with no money saved in advance, you will likely fall behind on other bills.
Instead, each month set aside a little money for those expenses. If your car insurance bill is $600 every six months, set aside $100 a month in a car insurance budget line. Then, in the month it’s due, you pay your regular $100 into this account and combine it with the $500 already saved from previous months to painlessly pay your car insurance bill.
Add to an Emergency Fund
Every paycheck, add some money to your emergency fund. Even if it’s only $20 when you get paid every other week, at the end of the year, you’ll have $520 saved. It’s not a lot, but $520 is more than you had the previous year. The larger you can grow your emergency fund, the more it can protect you from unexpected expenses. Then you don’t have to use credit cards to cover the cost.
Enjoy the Remainder of the Money
Finally, enjoy some of the money. If your budget is tight, maybe only take $5 to spend on yourself per paycheck. If your financial situation is comfortable, take a larger amount. You should spend some on yourself, but only after you’ve met your other financial obligations. These include paying bills, setting aside money for irregular bills, and adding to an emergency fund.
Final Thoughts
The smart things to do after payday aren’t complicated. Follow these four steps, and you’ll see your finances improve in no time.
Read More
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Budget Managment: How to Pick the Right Budget for You
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Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York where she loves the natural beauty of the area.