Budgeting Your Payroll – Tips for the Fixed-Income Employee

Posted on 2015-01-25

Budgeting your expenses could be a real challenge. In a way, it is just like computing how you would live your life. It’s the reality for everyone, even kids must weigh the difference of a candy and a toy, and unfortunately, we will all face the tab for most of our time. Difficult times will come for sure, and how will you prepare for it? Saving what can be saved. Easier said than done? Well, here are some helpful tips to cover your financial management, and although general in approach, this will definitely help you in getting by with your earning and spending struggle.

Preparing for the Famine

Yes, downtimes do occur. There will be times wherein your finances will be very low, and sometimes, your salary could not even cover for your monthly expenses.  So it is very important that when you can, and you are able to, at a time, save money from your salary. Having at least a summable amount from your monthly payroll could help you get by these financial crisis times. Make sure you have an idea of how much you spend everytime your monthly pay comes in, and try to help your budget by cutting down on unnecessary expenses like vices(if you have any),and unscheduled partying. Also, it would help if you get insurance coverage for (knock-on-wood), unexpected spends like accidents and illnesses.

Determine your expenses

Determining your expenses would really help you in your quest to budget your finances effectively. Knowing how much you spend will help you determine where does your salary go, and could help you decide with what to cut down or increase your allocation. Part of budgeting is, knowing where your money goes, and how much can you save after. How do you do it?

It would help if you would keep all your bills for a year. Then, tally all your yearly expenses (which will include your utilities, transportation expenses, and other payables) in total. Divide them by either 26(biweekly, depending on when your pay comes in), or by 12(monthly). Subtract the total of all your expenses in to your pay (this is, if you computed biweekly, subtract it in your pay biweekly; same as with monthly), and part some for your food allowance. Why separate the food allowance? Your food spending will greatly vary, and this, you have to control effectively, so you have to separate that. After doing the math, save whatever difference you get, and have a strong sense of control with what you have come up with to effectively increase your funds.

Spending in Trends

Determining the trend of your salary will also help you determine the trend of your spending, well, since you’re learning how to budget that pay, you have to determine the trend of months where your income is high because of work holidays, and months where your salary is low because of mandated vacations. Make use of the advantage of having the means of forecasting your salary, and avoid the surge of spending too much when the trend is high. Also, be flexible when it comes to spending. Having a tight budget doesn’t mean that the allocation for each part of your budget must be constant, for there will times that your salary will be much lower or higher from your previous monthly earnings. But of course, this does not mean that your attitude towards saving money should change too. Have the attitude of saving when you are able, and tighten when you can’t.