Paid Monthly? How to Make Cash Last

managing money when paid monthly
October 28, 2020 by Stuart Smale

It’s hard to know which is the toughest to manage. Getting paid weekly or monthly both present their own challenges. However, the horrible feeling of dread that you’re totally skint for at least one week each month is certainly not pleasant. Especially if that’s the week the big bills need to be paid!

Money constantly leaks from a normal household and it’s often hard to know where it all goes. This can lead you to a nail-biting few days when you rely on a monthly wage or Universal Credit.

It can feel like a feast and then famine each month. For the first few days, you can pay things off, do a big shop and maybe add a few treats into the mix. Then, as the days roll by, your bank balance drops and you start to wonder if you can make it until payday!

Getting a balance across the whole month is easier than it sounds. Especially when your outgoings are spread out. Then, of course, there are those irregular payments that can trip you up, such as a TV license fee or bi-annual car expenses.

So how can you juggle your money better, to make the end of the month less stressful?

Make a Monthly Money Plan

It is always worth writing everything down in a household budget. Preferably one that goes across the whole year to pick up annual outgoings too.

If you’re not a computer whizz who understands spreadsheets fear not. A notepad with pages for each of month and a handwritten budget works fine. In fact, some people prefer to go old school on money management, as it means they can keep the calculations hidden away rather on your laptop or phone.

What would you include in your monthly budget plan? The top items would be your monthly salary and any benefits payments or other income. Keep that clear as a constant reminder for spreading your monthly income wisely.

Then, make a full list of your essential and fixed monthly outgoings such as rent or your mortgage, energy bills, council tax and any loan repayments. If your monthly income doesn’t stretch to cover those, you need to seek some advice.

Add in any other direct debit amounts or regular payments.

Most people will then have an amount of money left each month. That needs to be split as evenly as possible across each week. So, for example, you could put £50 x 4 for your big shop which equals £200 to set aside from your monthly income. Another £50 x 4 could be petrol or travel.

Planning for Things Not Paid Monthly

Before you start getting excited that anything leftover at this stage is your treat funds, you still need to make preparations for those annual expenses and other amounts that aren’t paid out monthly.

For example, your TV licence fee is £157.50 for the year. If you put £14 aside each month, so when you get the bill for your licence you will have it covered.

You could do a similar exercise with your vehicle costs. Take what you pay for servicing, MOT, road tax and insurance (if you pay it annually), then divide it by 12. The figure you get from that is what you need to set aside each month, ready to keep your vehicle on the road and legitimate.

How to Save for Christmas

Now comes the tricky bit. You have worked out monthly fixed payments, the sorts of weekly household expenses you have for food etc, and cash to put aside for the big annual demands.

Whatever is left, is still not cash you can splash when you get your monthly wage!

For one thing, you need to put some money aside for special occasions, like Christmas and birthdays. Christmas saving is crucial. A 2019 survey found that 28% of people get into debt over the festive period and have a cash crisis in January.

Make sure you earmark money each month to avoid January debt or budget hiccups for major birthday months. Every little helps, as they say!

Fun and Emergencies

Once you have done all these calculations to spread your monthly wage well, try to set aside money for the fun stuff. Remember to spread that across the four weeks too. Having wiggle room to enjoy a few treats helps you keep to your plan. However, enjoying one big blast then a dull three weeks is too tempting to go over budget.

Also, try to put money aside each month for an emergency fund. This is for unexpected expenses not mentioned above. If the months go by and you don’t use it, it could be a holiday fund!

More Tips on Managing a Monthly Income

Having a plan to spread your income across the month is great, but don’t forget to refer to it regularly to make sure you’re on track. It is sensible to keep receipts too, and keep checking your spending is not going above the cash you have to last until payday.

A really great idea for making monthly wages manageable is to get your monthly bills going out on or just after payday. That way you won’t be as tempted to spend money you should be saving for the important stuff. Many companies welcome this and you can ask them to change the date of direct debits.

Having lots of your bills paid at once can be a source of great relief too. You know the big stuff is dealt with and you won’t be fretting about the prospect of having to pay rent, for example, when your monthly cash is dwindling.

Another great tip for stretching a monthly income is to have separate bank accounts. It’s usually easy to do online. Put money in one for your car, one for other irregular and annual expenses and a Christmas fund for example. At one time the system would be to put money in separate envelopes, tins or draws. Using a cash system like this suits some people. However, it’s not recommended that you leave a lot of cash in your property.

Having Money to Spend Every Week

Making a clear plan to spread a monthly income can still leave you facing a shortfall. It is more common than you think.

If this happens, try to only use a credit card to spend cash that you can pay back next month. Otherwise, it can be a slippery slope using credit cards for things beyond your budget and for impulse buys. Charges can be high and become a real strain on your monthly income.

You may want to consider a short term loan from a verified and reliable lender to help you out instead if you are confident that you can settle your payday loan from future monthly income.

The aim is to make your monthly income stretch so you can enjoy four weeks of feeling confident when you check your bank account!

Is the managing director of Cobra Payday Loans and Ready Money Capital Limited. He is responsible for all the day to day functions and performance of both companies and regularly contributes information on the short term finance sector. Stuart is an approved person with the Financial Conduct Authority, holding SMF3 (Executive Director) status.

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