Conscious Financial Living


Ideas and Opinions

Paycheck Friday: Bills vs Savings vs Spending

Fridays mean that we have made it through the week, once again. High-five.

Fridays mean two glorious days of freedom. Shout for joy. 

And every other Friday means an influx of cash into my checking account. Hallelujah. 

It's my favorite day-but not just because it's the weekend, because its PAYCHECK FRIDAY. Money. Money.

I have been through many stages of personal finance. I have been completely broke, and not knowing how to make those last dollars stretch (thanks to college gluttony). I have also forgotten when I get paid, just because I'm not that worried about it. Right now, I'm smack in the middle of these two scenarios. 

My perception of getting paid has changed over the years. At one time, I saw it as an excuse to go buy the newest trend, to keep up with the Jones'. Now, I realize that spending $100 on a pair of jeans does not make me feel more sexy or more confident, it makes me feel stupid. What makes me feel smart? Knowing that every other Friday I am paying down debt and moving money around to work for me. 

The first thing I do when the check hits my account is figure out how much I need over the next two weeks to pay bills. Is my electric due before I get paid again? What about my  cell phone payment? I subtract the amount that HAS to go out from the overall paycheck amount and I delegate what is left towards savings vs spending. 

Personally, I like to diversify my savings. I move some to an interest-earning savings account, and use this for emergencies. It's easily accessible and earns a little interest each month. I also move a portion into a Roth IRA (I'm also a big advocate in being tax diversified in my retirement savings-I also contribute to a pretax 401K).  The remaining saving amount goes in one of the following accounts: a basic brokerage account made up of mostly large-cap stocks, a peer-to-peer lending account, and an interest earning checking account used for short-term financial goals. 

I try to allocate the saving amounts  before I figure out what to do with the money that will be used for spending. Remember, I have already set aside my amounts for the various bills/payables that are due before next pay period. Sometimes the amount that can be used for spending is not very much. There have been times where I truly do not think I can live on an amount so small for two weeks. But with dedication and discipline, I make it work. In times like these, I use up all the food in the fridge, make homemade meals, brown bag the lunch, avoid happy hour. Yes, sometimes its not fun or glamorous, but in the long-run I want to set myself up for financial success and that matters more to me than having one (or four) Moscow Mules on a Friday night.