6 Things You Must Do AFTER Pay Day
What you do once you get paid makes the difference between a rough next few days and a pay period where you can save, spend, and do what you please with your money.
There isn't a perfect guide for what you should do when you get paid because each of us have different lifestyles.
Even if you are a college student, who's working, and some of your experiences mimic mine... there's going to be something different in the way you manage your finances.
Personal finances are personal.
Getting paid shouldn't be a sad day. It should be another opportunity to reach your financial goals and have the things you desire in life. With just a few habit changes and an open mind you'd be surprised what money filled opportunities await you.
By the end of this post you'll learn a few mistakes that people make after pay day and 6 things you must do after getting paid!
Common pay day mistakes
1. Not paying yourself first
Paying your bills, spending freely, and indulging in your paycheck BEFORE you send money to your savings is a no-no.
You have to think of your future self as you deal with your current circumstances. You can read more on how paying yourself first is the key to financial stability here.
2. Missing the chance to automate
Automation takes the emotion out of paying your bills, investing, or even saving.
It just becomes another deduction from your paycheck. Skipping this means you have to think more and take action to do the things that may not come naturally yet.
3. Making plans before paying your bills
Always think about paying the rent or covering your tuition bill before you consider the money in your account yours to spend.
Make a plan for paying bills so that you don't have to stress. Once the plan is established you have to set it in motion and allow yourself room to not worry.
Practice breathing, meditating, going for walks, and making sure you're rested.
Until your plan to pay your bills falls apart assume it will work and have a back up plan ready. Stress can be bad for your health.
4. Spending money blindly
Spend after the plan is made not before.
Even if you know you can afford breakfast, lunch, and a shopping trip to the grocery store, you need a plan.
Know how much will be left over after you spend $125 in the supermarket, try to not guess.
5. Not having a plan
When you forfeit a plan and forget to think ahead you create a path of chaos.
Your money is your friend it shouldn't cause you stress. Financial anxiety is a huge issue when it comes to managing your personal finances but it can be combatted by making a plan and sticking with it.
Or allowing yourself room to tweak it as needed.
6. Forgetting to budget
A budget lets your savings goals be met, investing needs fulfilled, and gives you freedom to live life on your terms.
I enjoy a no budget - budget. I automate my bills when I can, automate my savings and mindfully spend the rest.
Some people may like more structure and prefer to categorize their spending with the 50/30/20 budget.
But not having any sort of money plan or budget is recipe for failure. Get to know what you will and will not tolerate when it comes to spending.
Now that we went over a few things you should NOT do let's review a 6 step guide that can give you more control over your money. Below you'll find exactly what you should be doing after you get paid.
6 Things You Should Do After Payday
1. Pay yourself first
I recommend that you write down your income and subtract your expenses from it. Include everything you would normally pay for during this pay period and see what is left over.
Regardless of how big or small the number is, the first step of managing your finances is to take a portion and send it to your savings.
I started out with a small amount and took $25 from each check and sent it to my savings.
If you can’t choose an amount, then automate between 10% - 15%. This money should go directly into your savings account. For the time being this money will build up your emergency fund and become a sinking fund for any expected expenses.
Think: Tuition, birthday, wedding gifts, vacations etc.
Once you have a nice cushion of AT LEAST 3 months of expenses saved up you can shift your focus to investing. Set an initial goal of $1000 and move up from there. Once you have 3 months saved you can decide for yourself if you want to aim for 6 months of savings or switch financial goals.
2. Review your spending
You don’t have to make a complete budget (YET) but since you have already written out your expenses it could help to see if there’s anything you could cancel or tweak .
Remember the 10%-15% that you’re saving should and will increase over time. If you’re struggling to save more money or it feels like you’re cutting it close then canceling show subscriptions or calling to negotiate a bill could be a huge money move. It could be the difference between you struggling to save (but still doing it) and enjoying the process of preparing for the future.
Saving might mean just a few weeks of not bringing lunch till you get the hang of it.
Managing personal finance is something that only you can do properly. Of course you can read a blog or ask for advice, but everything should be tweaked so that when you pay yourself first and start to set goals, it feels nice.
Your confidence will build and it'll start to feel like this is exactly how you should be managing your finances.
3. Pay upcoming bills
Part of managing your finances is paying your bills on time. Go ahead and log into your online accounts, answer when the bill collector calls, and pay your bills on time or ahead of time.
In our guide for getting your first credit card you can learn tips and tricks for managing and understanding your next card.
One of the tips mentioned is that you can make two payments for your credit card when you’re paying the bill in full.
Pay the minimum once the balance is posted and then pay the rest before it's due date. It becomes TWO on time payments that are reported to the credit bureau.
Managing your finances is just a bunch of tips and habits that will become natural over time. And even the ones that don’t feel natural like learning how to save money in the grocery store will reap maximum rewards in the end.
4. Pay back any money that is owed
Surprisingly this tip for managing personal finances does not relate to paying back a credit card or a personal/school loan.
Managing personal finances means you have to clear any personal debt that you have to people whom you know. If you know that you owe your long lost cousin $50 from two cookouts ago, start making a plan to pay it back.
You start to lose credibility when you borrow money and never offer it back. If the person tell you it’s okay, they don’t want the money then feel free to add the money to your sinking funds or money that you have been stashing away.
Managing your personal finances includes includes, paying yourself first, reviewing your spending, and paying back those whom you owe money too.
5. Have no spend moments
A variation of a no spend day is a no spend day. I like to think of this as when you decide today I will not go outside and buy [ fill in the blank ].
Today I won’t buy anything on my lunch break.
This weekend I won’t go to [ Fill in the blank].
A no spend moment is perfect for building financial discipline as you begin to master managing your finances.
Any money you would normally spend, such as $10 in the morning on breakfast can be allotted to your savings.
Remember how you choose to manage your personal finances is personal
6. Find a way to talk about money
You don’t have to disclose everything about how you have been managing your finances. This is 100% your business.
But what you can do is find people to bring up certain topics with for sake of getting rid of that taboo that most of us don’t even realize is there. Majority of households don't discuss salaries, the idea of negotiating, or even leaving jobs that no longer suit your purpose.
Financial check-ins with your partner, parents, and even friends are essential to making positive money moves.
Creating a community full of online friends whom are already involved in the personal finance community can make thinking outside of the box easier as well. Retiring early? Investing your first 100k?
It’s all possible. Check out our store for printable resources BELOW.
How you choose to keep managing your personal finances is up to you.
Conclusion
Managing your finances with the right tools and mindset can be easy. Whether you start your journey by opening a retirement account or by tackling debt you are 100% heading toward a path of financial freedom.
Let me know in the comments how you plan to do something different this next paycheck!
