How to Budget an Extra Paycheck

I may it's kind of a weird month if you get paid every week or every two weeks it's one of those months where you're gonna receive an extra paycheck but is it really extra income today I'm going to show you how I budget when I receive an extra paycheck in the month and how it's really important to plan ahead I try sharing my story to remind readers that there is a way out that with hard work dedication determination motivation it's all about having a plan for your money and that's what gives you the two people holy crap it just changed my life you're like oh man you go it work no more credit-card debt welcome to the budget mom YouTube channel today we're gonna be talking about that crazy extra paycheck that you will receive if you get paid weekly or every two weeks throughout the year there's gonna be two months out of the year where you're gonna receive quote-unquote an extra paycheck but is it really considered extra income and how should you plan the budget for it and what should you do with it today I'm gonna be giving you a couple of different examples on what it might look like to receive an extra paycheck and how I budget my income when this happens so I'm gonna be showing you two example ones is gonna be if you get paid every two weeks and one isn't gonna be if you get paid every week the most important thing to remember when you get multiple multiple times a month is to plan ahead and how I plan ahead is I use the calendar method incorporated into my overall budgeting method this helps you see exactly where your income needs to go and what you need to plan for so let me show you how I plan and budget my money when I receive an extra paycheck so the first example that I want to show you today is what it looks like when you get paid every two weeks now just for now just for informational purposes this is a full-on example the the bills are example the the paycheck amounts are all examples they're just made-up numbers but I the steps and process and the method will still be the same so in this example I use the highlighter method when I fill out my budget calendars my budget calendars are essentially a calendar that lists out my paychecks and all of my monthly bills that I have to pay it also includes any appointments or any doctor's visits or any events or holidays happening in that month that also need to be included in my budget so as you can see for the month of May I am getting paid every fry every other Friday so the third the seventeenth and here on the 31st is that quote-unquote extra paycheck so each paycheck represents a different color on my budget calendar every all of the bills that I'm paying with each corresponding paycheck matches the color so for example on May 3rd I am getting paid $1,500 per paycheck for this example I'm paying my car payment that's due on the 7th and my daycare expense that's due on the 12 my car payments to 50 and my daycare is 500 and my paycheck is 1500 so I create because I'm a paycheck budgeter I create a budget every single time I am paid so when I get paid in this example on May 3rd I'm gonna have a budget that looks like this I'm paying my car which is due on the seventh day care which is due on the 12th and here is why it's so important to plan ahead and especially look at two calendars when you are doing your budgeting process so right now we're talking about the month of May and getting paid in May but we really need to be looking at what's happening in June as well most people who get paid more than once a month have a very hard time paying larger bills with one paycheck so for instance rent that's due on June 1st is $1,000 if I paid that bill with one of my paychecks that's gonna leave me very little money left over from my variable spending or saving or paying off debt so the best way to handle large bills like your rent for the following month is to break it between your different paychecks so you break it down between paychecks as you can see on my rent on June 1st I'm using my paycheck on the 3rd which is pink my paycheck on the 17th with is blue and my paycheck that I'm receiving my bonus or extra paycheck on the 31st I'm putting $200 to run every single time you get paid you're going to create a budget that looks like this now even though I'm talking about my May 3rd paycheck I'm writing a bill that's due for the following month in June which is my June 1st I'm setting aside $500 now it's up to you on how or where you want to set that money aside so you don't spend it because you're gonna have to set it aside so you have the money when the bill comes due on June 1st for me I just leave it just sitting in my checking account because I only use my checking account for paying bills and for receiving income I had never swipe a debit card I'm an all cash spender so for me it was okay to leave it just sitting in my checking account if you do swipe your debit card and have a hard time with tracking what you have left in your checking account I highly suggest pulling out the money that you're setting aside for these bigger bills put it in a cash envelope somewhere somewhere safe that way you have it set aside so you have the money when it comes due for my paycheck on the seventeenth I'm paying a couple a lot more bills as well as setting aside money for my June first rent I'm paying my phone bill on the 21st my credit card my medical insurance and my loans so I'm paying these bills because I don't get paid again until the 31st which is my extra paycheck so for that budget you're going to have a budget that looks like this here's my paycheck on May 17th right here I'm getting paid $1,500 I'm paying the phone for a $100 credit card that equals 250 medical insurance for 200 and loans for a hundred as well as setting aside $300 for my rent on June 1st all of these bills equal 950 if I subtract my bills from my income that gives me $500 550 dollars left over to use for my variable spending which is my cash envelopes extra debt payments extra savings or if you're doing sinking funds you can use that money there as well for my last paycheck the Paycheck that we all considered extra income or extra paycheck that's gonna happen on May 31st $1500 I will be using this extra paycheck on the 31st to cover the rest of my rent as well as my car payment in June and my daycare in June because I'm not getting paid again until the 14th so even though this is a paycheck we don't normally receive it's still being used to cover bills into our next paycheck on June 14 so your paycheck for your last paycheck on May 31st it's going to include $200 to finish out paying your rent your car in June and your daycare in June even though we're budgeting our money for our May 31st paycheck you are covering bills that are doing the beginning of joke of June because you don't get paid again until the 14th of June so do you see in this example how looking at your calendars and planning ahead is so crucial if you didn't plan ahead and if you were not looking at your paycheck bill dates and your expense dates for your normal your normal monthly bills you would say to yourself well this is not a paycheck that I normally receive so it's extra money but it technically technically isn't because you still have to cover your bills in the beginning of June because you don't get paid again until the 14th now I'm not saying you won't have any extra extra income because of the way that you receive your third paycheck it just needs to be planned for in your budgets so maybe you have a little bit more money left over but you're not gonna have the whole entire paycheck as extra income so that that's what it looks like if you get paid every two weeks let's look at an example if you get paid every week this is an example of what it looks like when you get paid weekly in this example we're getting paid every Friday and we're getting 750 dollars for every paycheck the same thing in the same method and steps is used as if you were getting paid every two weeks so you would literally look at your income in your budget every single time you were paid so on your main third paycheck which is 750 dollars you have to pay your car payment which is only 250 that gives you a white a bit of money left over so you do have to make sure you have enough money to cover your June rent because you don't get paid again until the 7th so with my May 3rd paycheck I'm gonna set 250 dollars aside for rent and that looks like this with your May 3rd paycheck you're paying that car payment on the 7th as well as setting 250 dollars aside for rent that's leaving you 250 dollars left over to use for the week for food gas clothing fun expenses miscellaneous whatever your cash envelopes are for your paycheck on May 10th you have the same 750 dollars in income and you're gonna be taking care of only one bill your day care bill it's $500 it's due on the 12th that eats up a significant part of your May 10th budget so you're gonna be paying one bill and so on your paycheck budget you're just gonna be listing your day care that gives you the same two hundred and fifty dollars left over after taking care of that bill to use for your variable spending cash envelopes extra bet or extra savings now the paycheck for the twenty-fourth bar excuse me for the 17th you're gonna be paying a couple of different things your $100 phone bill you have to pay that before you get paid again as well as we are still setting aside money for rent $500 so because the only bill we had to pay with our paycheck on the seventeenth was only a hundred bucks that gave us a whole lot of money extra to throw towards rent to make sure we have enough for that when that comes due June 1st so that budget would look like this you're paying that phone bill on the 21st as well as setting aside $500 for your rent that's due on June 1st this gives us leaves us with two other paychecks that we're going to receive now one of the questions I get is in the budget by paycheck workbook there are only four paycheck bill trackers so the number one question I get is how do i budget for that fifth paycheck if there's only four paycheck bill trackers in the workbook you combine paychecks so your paycheck on the 21st and the 31st can can be combined into one paycheck bill tracker a budget that looks like this here's your paycheck on the 21st our 24th and your paycheck on the 31st both of these are 750 which gives you a total of fifteen hundred dollars that you're working with for these two paychecks with these two paychecks you're paying the rest of May's bills which is your credit card your medical in in your loans with your paycheck that extra paycheck that you're receiving on the 31st you're taking care of your rent the remaining part of the rent that you owe for rent and your car here's why planning ahead is so important in using your calendars you might be asking well I get paid on the seventh why can't I just pay my car on the seventh with that paycheck my car is only 250 dollars in my paycheck 750 because you have a day care payment that's due on the 12th for $500 and you have to pay that again before you get paid on the 14th so this paycheck on the seventh needs to be used to pay that one day care bill if you used it to pay your car payment as well that eats up your entire check you have nothing left over for your variable spending you're gonna need gas you're gonna need food with that paycheck for that week and so looking at it a month ahead will actually allow you to budget your income for this current month even though you're looking ahead the following month so with that last two paychecks you're combining the paychecks you're writing out the bills you're gonna pay with those two paychecks and that gives you as you can see yes a little bit more money than what you saw with the other budgets but that's because you're dealing with two paycheck this money this 450 means to last you two weeks instead of one because you're you your planning and budgeting for two paychecks here so I know this might seem very confusing and I get a lot of people who say Miko this looks too complicated why can't I just budget my money monthly and you can there's nothing wrong with doing it that way budgeting your money monthly but getting paid weekly I used to do that it didn't work for me my mind works better budgeting my money every single time I got paid because I liked having a plan for those dollars the moment I received them and knowing and being able to say I want this to go here here and here when you budget your your paychecks monthly it's nice to see yes in a monthly form but it's really hard to plan out specific plans for those dollars every single time you receive a paycheck so if you receive an extra paycheck during the month like in May most likely you're gonna be getting a paycheck on the 31st which we call an extra paycheck make sure you jump into the following month and plan for your bills and what these paychecks including that extra paycheck needs to cover for the following month because you might not have as much money left over or extra income as you thought especially when you start looking into your scenario for June and what that income dollars need to cover so don't just look at the the month that you're working on always look at the following month especially when you get paid multiple times a month share it and don't forget to subscribe you

Channel: The Budget Mom

Views: 39,047

Rating: 4.953372 out of 5

Keywords: budget, paycheck budget, budgeting, paycheck, extra income, third paycheck, dave ramsey, cash envelope method, cash envelopes, budget calendar, debt, pay off debt, save money, saving, the budget mom, thebudgetmom, frugal, frugal mom

Id: PhoHoSrI0_o

Length: 16min 9sec (969 seconds)

Published: Wed Apr 24 2019