As humans, we are creatures of habit. We have habits, rituals and routines we practice and move through each day. These rituals can be so engrained in our minds that we may even feel as though we are on autopilot as the days go by. Some days are special and our routines change; one of these days is on payday. Payday routines look different from person to person, depending on your unique financial situation and your spending habits. Throughout this article, I will offer suggestions to make changes to power up your payday routine.
The Credit Union National Association (CUNA) has identified four money cycles that may have a large influence on your payday routine. These money cycles include earn-spend-earn-spend, meaning living paycheck to paycheck, earn-spend-borrow-spend, or using debt to supplement your lifestyle, earn-spend-save, meaning attempting to save leftover money, and earn-save-spend, or paying yourself first before spending.
Taking a moment to reflect on the money cycle that you fall into will be the first step towards making changes to your payday routine. In some cases, small changes and intentional spending will help you move out of a cycle that is hurting your financial health and into one where you can thrive and reach your goals.
Making your plan for payday ahead of time will set you up for success. Many of you may already have a list of the bills you pay, when they are due, and the amounts owed. If you do not, start making that list today! Is there always a part of the month where money gets tight? Review what pay periods each bill is being paid from and consider spreading your payments equally between pay periods. For example, if your student loan payment is $350 due on the 30th of each month, you can save half the amount ($175) from your first paycheck and fund the remainder from your next paycheck.
Set aside money
Once you have your plan for paying your bills, it is important to plan how you will spend the money you have leftover. This money is usually used for groceries, savings, extra debt payments, and things you want. One strategy, depending on how often you are paid, is creating a sub-saver or a specific account to set aside money for closer to your next payday. This means if your income is received biweekly, setting aside half of the money that you have leftover for the week you aren’t paid. This will help your money last closer to the next time that you are paid, making it easier for you to pay for the things that you need versus relying on credit cards to get you through to your next paycheck.
Pay yourself first
The most powerful habit you can pick up to change your money cycle is to pay yourself first. Paying yourself first does not mean buying yourself something that you want to celebrate getting another paycheck. It means, putting some money into a savings account before you spend it on something else. The other key is to not touch that money and view it as savings for future you. It can also help to tie your savings to a goal. Coming up with a reason why you are saving or a savings goal will help you be less likely to spend that savings. Over time, this can become a strong habit and your savings will grow.