EXPLORE

Better Money Habits: 5 Things to Do When Sweldo Day Comes

Now, before you go and treat yourself...

Fiscal responsibility may not sound as sexy as a shopping spree or, say, treating yourself, but if there’s anything we’ve learned from the past year, it’s that being smart with your money is crucial. Maybe it’s also just a matter of perspective. Depending on how you look at it, money management can be easy, non-intimidating and actually fun, especially when you get to see the fruits of your savings and self-control. And that self-control is key whenever sweldo day comes around.

In the interest of building better money habits this year, there are certain choices you can make on payday that we guarantee you’ll thank yourself for later. Here are just five of them:

Compute 20% of your after-tax pay and set that aside RIGHT AWAY.

There’s no one rule when it comes to saving, as scenarios differ from person to person. But one budgeting tactic you can start with is the 50/30/20 rule. 50% of your after-tax pay should be budgeted for your needs. 30% for your wants. 20% for your savings. As soon as you get the number for this 20%, set it aside—pronto.

It’s easy to fall into the trap of spending first and then saving whatever’s left over, hoping it amounts to that 20%. This doesn’t give you stability or a guarantee you’ll be saving, though. So once that paycheck comes in, deposit savings. Keep them out of sight and out of mind. Do not withdraw from this fund down the line unless you absolutely have to.

Put money toward an emergency fund.

Looking closer at the 20%, it’s time to ask yourself about what things you’re saving for. Some people save for retirement. Others put money toward their next vacations. Again, the kinds of savings funds to line up and slowly put money into differ from person to person. There is, however, one fund that’s worth setting up regardless of priority or lifestyle: the emergency fund.

Ideally, this should total three to six months’ worth of expenses, ultimately acting as a safety blanket or cushion to “catch you” should anything go wrong. Things like getting suddenly laid off at work and bills from unexpected medical procedures are instances that might call for this cushion. The sooner you begin putting money into an emergency fund, the better. Start by setting a monthly savings goal (or even weekly goal) and be consistent.

Prioritize bills and paying off debts.

To better manage your bills on payday, create a masterlist or complete summary that you can check at a single glance. This should cover the biller’s details, how much is due and when. It’s imperative that once you’ve set aside savings on sweldo day, you turn your attention to these items.

Do not wait to pay your bills––especially the ones that incur interest. The same rule applies to loan repayments.

Sort out your wish list—and then sleep on it.

In the heat of the moment, when the desire to give in to impulse purchases is the strongest, it may get tricky differentiating necessary expenses from redundant spending.

To get ready for sweldo day, take stock of everything you’ve been meaning to (and wanting to) buy. Revisit your browser tabs of wish list items, all the things in your online shopping carts you’ve parked for “next time.” Get them all down on a list...and then sleep on them. Simple. Giving yourself time to see your wish list items in a single rundown provides perspective. The morning after sweldo day, assess where you can make compromises. You can even resolve to revisit everything again in 31 days, and see if the need to make the purchase still arises then.

Review your budget.

We already mentioned the 50/30/20 rule of budgeting. That, however, is only the foundation. To get better with money on sweldo day means working with a budget that’s specific to you, your household, your lifestyle and your needs. You can start by using your previous month as a benchmark, so gather those receipts!

Last month, how much was your income? What bills did you have to pay for? What necessities did you go out and buy? What about non-essentials you treated yourself to? Feel free to get specific: How much was spent on meal prep for cooking your own meals versus eating out? What things did you end up buying on a whim? From here, you can craft an estimated budget, something that you will then bump against your actual paycheck budget once sweldo day arrives, and you start spending your money.

This is a continuous learning process, so updating that budget month after month is key. See where you tend to get too indulgent. Analyze where you can cut costs. Assess what lifestyle choices have been eating away at your sweldo and savings.