Budgeting around strange timings

May 9, 2007 12:03 AM

How do I conceptually wrap my head around a monthly budget that doesn't want to play by the rules? My money matters are fairly simple, but the timing is killing me.

At the moment, my monetary issues aren't too complicated. Basically, I work a full-time job, pay rent and all those related bills, and am steadily paying off a car, student loans and very minimal (under $500) credit card loans. I've kind of been playing fast and loose with budgeting, which has miraculously worked up until now, but I want to get a firmer plan to make sure that I stay strong and can start actually saving and investing.

The things I've read about budgets seem to deal with a pretty simple monthly format: you get paid once or twice a month, bills come around once or twice a month, incidentals are sprinkled throughout. However, this isn't my case. At my work, they just changed to a payroll system that pays us once a week; I've already asked, and this can't be changed. My bills are also agonizingly spread out over the course of the month, with several hitting every week; I'm not sure how flexible those dates are, and a few of them are automatic debits anyway.

I'm having the most trouble dealing with getting paid weekly. I realize it's the exact same amount of money coming in, but when it's coming in small bursts, I can't get a handle on the bigger picture and savings and all of that. The bills are also frustrating to keep track of, because they all seem to crop up randomly. I feel like my money is always slipping away and I'm sort of on the brink each week, like I should be holding my breath every time I go to check my statement online. But I just don't know where to go from here.

So basically, does anyone have suggestions for what I should do, conceptually and/or practically? I'm considering having my paycheck directly deposited into my savings, and setting up a biweekly/monthly transfer from savings to checking to mimic a more sensible pay period, but I don't know if that'll just confuse me further. Oh, and I'm a Mac user, if that helps.

Thank you ahead of time!

posted by sarahsynonymous to work & money (20 comments total)

See if your bank (or another bank that's convenient for you and meets your needs in other respects, if you wouldn't mind switching) has some kind of automatic billpay system available. You could then
1)have your paychecks deposited directly into your savings and
2)have an account--your checking account, if that's all you use it for--that's just for the money that goes towards bills.

Then, once a month (or twice, or whatever works for you) you move the amount of money you'll need for all your bills into the "bill money" account, and then money gets withdrawn from that account as the bills get paid through the automatic payments.

Of course, you'll need a good buffer for this to work, and you'll probably only want to do it for the ones that are fairly consistent from month to month (utilities, maybe).

You could give it a buffer of one or two month's worth of payments, and then, each month, look over the accumulated bills (which have already been paid from the buffer; I'm definitely not suggesting just letting them sit unpaid) and deposit enough money to cover them in the "bill money" account (so, you're refilling your buffer).

If you're using multiple credit cards, you might consider dropping some of them so you'll have fewer bills to deal with.
posted by Many bubbles at 12:29 AM on May 9, 2007

Oh--by the automatic debits comment I see your bank already lets you do automatic payments. Cool.

It's sort of late for me, so in case it wasn't clear, I'm just suggesting setting it up so you only have to think about it once or twice a month--and the buffer so that it's safe to ignore it the rest of the time. And the separate account (you know, if it's feasible) so that they're not mixed in with other expenses (harder to track that way) and so that you're not spending that money on other things.

Blerg
posted by Many bubbles at 12:37 AM on May 9, 2007

The moneysaving expert has an Excel budget planner that has a "weekly" column, so hopefully that will be a useful first step for getting a grasp on your finances as they are right now.

Regarding your bills, take a day off of work and call all of your creditors, ask them to change their bill date to something that works for you. Maybe shift everything to the end of the month, and take many bubble's advice and move money into a bills account over the course of the month.

If you can piece together a month's worth of salary out of savings, etc., you can be paid monthly -- just dump all your paycheques into the savings account and do a once-monthly withdrawal to both your bills account and checking account. You'll be using last month's money, and won't have to hassle with all the weekly nonsense.
posted by ukdanae at 12:43 AM on May 9, 2007

Call the various companies who send you monthly bills and request the due dates be moved to dates more convenient to you. I consolidated all my bill due dates to the 7th* of the month some time ago and didn't encounter a single company that refused my request; you will have a transition month where you may have to pay two bills from one company (to avoid paying a late fee for having a +30 day billing cycle) but after that, you should be able to only have to deal with bill paying once or at most twice a month.

*I chose the 7th because I like to pay my bills on the first day of the month. It's an easy day for me to remember to do it and having the bills due a week later means that no payments will be late. If you're a renter with rent due on the first, perhaps picking another date will be better for you.

I prefer to have direct deposit into interest checking, with a monthly payment from my checking made into my savings account. This allows me to mentally treat my savings account as a one-way destination: funds only very rarely leave my savings and only after quite a bit of consideration. I also requested my bank delink my savings accounts from being accessed via the ATM as another barrier to impulsive withdrawals.

Via your online banking, set up automatically recurring payments for all bills that are fixed amounts (rent and car payments, for example, and auto pay into savings) as well as payer accounts for everyone else.

On preview, yep.
posted by jamaro at 1:02 AM on May 9, 2007

I have no real experience with budgeting so take this advice with a grain of salt, but perhaps you could use a credit card (get one specifically for this task) to pay all your bills throughout the month, and at the end of the month pay of your credit card bill.

This would probably make it easier to manage your money, and might even have some extra benefits (i.e. flyer miles, money back, etc).

And again, I haven't got any practical experience with budgets and bills because I don't live on my own yet. But I've heard other people doing it like this, and it seems to work fine for them. Of course you have to be careful not too overspend, and that's why you really shouldn't use this CC for anything else.
posted by jayden at 1:30 AM on May 9, 2007

Maybe there's some extra complication I'm not understanding here, but why can't you simply multiply or divide as appropriate to budget on the time unit of your choice?

Eg, I used to get paid monthly, pay rent two-weekly, have weekly expense as well.

So, I worked out a one month budget:

Pay x 1
Rent x 52 / 6
Weekly things x 52 / 12

You could also normalise everything to one year. That's quite a good thing to do anyway. It can be a bit of a shock to see what a year's worth of coffee costs you, for example.

If you use a spreadsheet it's pretty easy.

The other thing you have to realise is that if you do work out a budget on this basis, and you don't rationalise the dates where things fall due, then a certain discipline applies. You know that every month, you have $200 free - cool. Then that is all you can spend over your regular commitments. The fact that there may be a lot more than that in your cheque account is irrelevant - everything over that $200 is spoken for even if it hasn't come out yet.

One way to enforce this discipline is to have a separate account for your discretionary spending, or to withdraw your play money in cash, every month. When it's gone, it's gone.
posted by i_am_joe's_spleen at 1:58 AM on May 9, 2007

I run a simple budget, based on a spreadsheet I created. I tried using Quicken and the like, but they're just too complicated and time-consuming. I use NeoOffice's spreadsheet component (I'm also on a Mac).

You should definitely create a monthly budget. Create a spreadsheet for yourself. Create two overall areas within a single worksheet: one for incoming, and one for outgoing. At the bottom of each should be a total column, so you can see total incoming and total outgoing each month. Don't bother trying to tie this into the balance of your chequing account. All you want is a list of incoming/outgoing. Here's how to understand it: Each month you're effectively starting afresh with a new set of incoming/outgoing.

Create columns for (1) nature of payment, (2) amount of payment, and (3) date of payment. You'll need to scour old bank statements for this info (online banking is a real help here). The latter is important and will help you see 'at a glance' what's going on right now, should you view the spreadsheet at any time in the month.

If you do this well, the spreadsheet will become like an obsession. You'll polish it. Controlling your finances is actually quite appealing, provided you can get on top of it all. (And I talk as somebody who has neither much money or any accounting ability.)

Detail everything on your spreadsheet—every type of bill, every type of incoming (ie your weekly salary, inc dates!), plus entries for fuel/transport, groceries, spending money, cellphone. Avoid the temptation to group certain payments together because they're similar. Then again, don't be too anal—don't split the cellphone monthly charge from the cost of calls if it's all paid in one monthly bill. All you're interested in is payments coming in or going out of your account.

If some bills are variable, like a cellphone, you'll have to estimate an average monthly charge. I do this by averaging the last six months. Be liberal here—overestimate. That way you can only be happy if you come in below your estimate.

I would also do the following:

1) Speak to your bank about arranging an overdraft facility. I'm a Brit so don't know how US banks work, but in the UK setting up an overdraft is free, but you get charged interest. The idea is to create a cushion zone in case a payment needs to be taken when there's no money around. This will save on bank fees or refused payments.

2) Speak to all the billing people and ask to arrange for payments to be taken on the first of every month. You can't avoid this step. Explain that you're attempting to wrestle your budget into shape and that by allowing this change, they'll be certain of regular payments. I only know of one company here in the UK that was inflexible enough not to allow payment on the beginning of each month. All the rest were cool.

3) Assign yourself a certain amount of spending money each week (it will be entered as a monthly total on your budget, ie weekly spending money x 4). Be realistic here. If you like to party, budget for that. Don't exceed this. When it's gone, it's gone, so you're going to have to keep a tally in your head of how much you've spent across the month. This should be separate from money for fuel/travel, and money for groceries, both of which will have separate entries on your list. This is simply your spending money.

A useful fact:

Each month averages 4.3 weeks. This can help when working out monthly payments, although bear in mind that it's a rough figure.
posted by humblepigeon at 3:13 AM on May 9, 2007 [2 favorites has favorites]

I don't really get the problem with the weekly check, but here's a simple solution: Just cash them every two weeks or even once a month.
posted by DU at 4:53 AM on May 9, 2007

Even with the checks coming in every other week, this drove us crazy too! Here is what we did:

Excel spreadsheet, 2 sections: Fixed Expenses and Variable. Fixed included things like the cable bill that gets autopayed via credit card, mortgage, etc. Variable include groceries, entertainment, etc. And then each expense has a column for budgeted amount and actual.

So, at first I just wrote the excel spreadsheet and put in guesses for the numbers. Then I spent a month where every time I paid a bill or spent money I entered it into the spreadsheet. That in itself is bracing. You really know where your money is going after that. It also brings unnecessary items to your attention. If you just deal with one thing a week you can cut a lot of stuff while gathering info.

After a few months of this it got where I didn't even need to fill in most of the numbers. Car insurance, etc, is the same month after month. We discovered the only numbers we actually need to track our groceries, clothes, household expenses, and entertainment.

So now I just pay the everything (including credit card bills) in full when they come in. Everything is pretty much on autopilot now so I don't have to track every last thing.

Oh, this system also depends on the fact that we have a small amount of savings that we can use as wiggle room - if we need a little to tide us over till the next paycheck we pull it out of savings, then put it back into savings when the check comes in. It all works out in the end despite the random timings. Hope this helped.
posted by selfmedicating at 5:41 AM on May 9, 2007 [1 favorite has favorites]

I pay all my bills on the first of the month regardless of the due date. By doing this every month nothing is ever late.
posted by loiseau at 6:48 AM on May 9, 2007

I nth the idea of a second bank account, and using the two to control your access -- one is for bills and savings, one is for discretionary. Or you could even just pay out your discretionary to yourself in cash each week, and then leave your account exclusively for have-to's.

(I won't lie, I'm so undisciplined when it comes to saving that I also have a third bank account, one I never see, which autodrafts a sum each month from the bills account and which has controlled access like jamaro's suggestion)

Something that helped me a lot was to keep a little notebook in my purse and jot down every single expense for a couple of weeks. Not just bills, but a lip gloss here, a coffee there, lunch with the co-workers, bottled waters... there are a lot of tiny expenses in the business of life and that's where the money "slips" away. The notebook trains you to become mindful of what's actually going out, not just the big-picture rent/utilities/car expenses.

Your situation sounds a lot like mine five years ago, and this is what worked best for me: putting the bills and saving money into an arrangement where the system was disciplined for me, and then allowing myself to practice prudence -- or failure -- on the little discretionary purchases.

You might hear people say that if the banks and autodrafts are maintaining the discipline for you, you can't build the self-control on your own and you'll never be good with money. I disagree. In my experience, after a few months of a system that helped me help myself, I became addicted to the security of not stressing every week over how to rob Peter to pay Paul. Now, I am disciplined of my own volition, because the thought of returning to that crazy fiscal insecurity is a very powerful motivator.
posted by pineapple at 6:52 AM on May 9, 2007

You need to save up one month's income as a buffer. Once you've done that, you budget each month to spend your paychecks from the previous month. It will no longer matter when you get paid, or whether the amounts are irregular.

You Need A Budget takes care of this automatically.
posted by designbot at 6:58 AM on May 9, 2007

The first thing to do, if you haven't done it before, is to track every penny you spend. Do it for 2-3 months. Assign categories that make sense to you, like utilities, rent, entertainment, medical, clothing, etc. When I did this myself, I used a very simple Excel worksheet (with date/description/amount/category), but you could do it on paper or whatever. This is also a good way to discover "fat" hiding in your spending habits.

Once you've got a handle on that, then you're in a better position to estimate your future needs. As jamaro suggested, you can reschedule your automatic debits to occur when it is most convenient for you. There's nothing magical about monthly or semimonthly paychecks, and conversely, without a good sense of your outflows, no paycheck schedule is going to solve your problems for you.
posted by adamrice at 7:06 AM on May 9, 2007

I'm not crazy about trying to control your spending by limiting the amount of money in certain accounts. It doesn't necessarily stop you from overspending, it just means that you'll pay nasty overdraft fees when you do. I was running up $100 or so in bank charges every month for a while before I straightened out my budget.

Making a comprehensive budget is much more important than the details of where the money is kept.
posted by designbot at 7:56 AM on May 9, 2007

I had to go from twice-a-month to every two weeks and it threw my entire billing schedule into a massive state of higgledy-piggledy. A few modifications to my budget spreadsheet on Excel helped me out massively. I can e-mail you a copy when I get home from work tonight.
posted by WCityMike at 9:25 AM on May 9, 2007

i can't imagine being paid weekly - it would do my head in. probably best to use two accounts and give yourself a 'monthly' paycheque!

definitely get your billing dates changed to a date that suits you. think carefully what date this might be - normally i'd say a day or two after you get paid. direct debit dates can normally also be changed to suit.

certainly in the UK utility companies will let you pay say amount X every month as payment on account. every quarter you get a usage based invoice and pay the balancing amount...assuming you pick a realistic amount to begin with that makes budgeting a lot easier.

analyse your bank statements for the last three months - and work out what you pay when. and don't forget the stuff you only pay annually - the renewal form is bound to come in a month when you are already short of cash.
posted by koahiatamadl at 9:31 AM on May 9, 2007

I won't add to the confusion; there's a lot of info in this thread, and I think many of the options would work well. But if you take the advice to start a budget (which I would encourage you to do), consider PearBudget. It's free, and covers the different types of expenditures you're facing (variable, regular, irregular) well, and I think it'd also handle the weekly paychecks relatively well.

Disclosure and all that: I made it, but it's still free. If you're already feeling overwhelmed, it might be easier to start with a pre-made setup than creating your own. Nevertheless, do what works for you.
posted by Alt F4 at 9:52 AM on May 9, 2007 [1 favorite has favorites]

Thanks so much for the input, everyone. I'm definitely going to start closely tracking my expenses right away; PearBudget looks promising, and I'll ask around and see if my friends have any systems in place. I have also considered the idea of having a separate account for bill money, and now I'll definitely look into that. I also didn't realize how easy it could be to get bill dates moved - I will make some calls about that this week.

Thanks again!
posted by sarahsynonymous at 10:08 AM on May 9, 2007

I also didn't realize how easy it could be to get bill dates moved...

This is a good lesson that applies to much more than getting bill due dates moved around, one I wish I'd learned earlier in life: Everything is Negotiable.

Also applicable is the corollary: It never Hurts to Ask. More often than you'd expect, the answer is "yes."
posted by notyou at 11:38 AM on May 9, 2007

The one piece of advice I would add is that using real cash is a great way to wrap your head about how much you have left to spend. Some folks do budgets with cash in envelopes, I just know how much I have set aside for lunches out, magazines, and dumb stuff. I pay myself an allowance every week and when it's gone, it's time to eat leftovers for lunch. Sometimes seeing that I only have $10 left is a great incentive to skip buying crap.
posted by advicepig at 6:00 PM on May 9, 2007