How to Budget Paycheck to Paycheck

Sticking to a weekly or monthly budget does not always work for everyone. For those people, learning how to budget paycheck to paycheck can often be the answer.

My husband and I both have very different incomes. His is paid consistently every week. Mine, however, is paid irregularly. Some of my income is paid weekly while others are paid monthly and with the exception of a couple companies I work with, it is almost never the same date of the month.

This can make budgeting rather tricky at times. It’s this reason -and the failed weekly and monthly budgets that happened – that I changed how we budget. Instead of budgeting weekly or monthly, I began budgeting paycheck to paycheck.

And it literally changed our finances in ways I never expected.

What is a Paycheck to Paycheck Budget?

Unlike a weekly or monthly budget, with a paycheck to paycheck budget, you create a spending plan that goes from payday to payday. By doing this, you are able to ensure that you are able to cover your expenses due that week without any shuffling or guessing.

It’s the perfect way to keep an irregular income budgeted very well.

How Does a Paycheck to Paycheck Budget Differ From Weekly?

They’re actually quite similar but the biggest difference will be in how often you’re paid. If you’re paid weekly, you’re budgeting weekly. But, in the case of an irregular paycheck, you could be budgeting as much as ninety days apart.

For instance, in our personal budget, we have some weeks where he receives his paycheck but I will receive several or paychecks back to back. On other weeks, all we receive is his paycheck. This means that sometimes we are literally budgeting three days apart but others we are budgeting week to week.

Why Does a Paycheck to Paycheck Budget Work?

For us, a weekly or monthly budget did not work because we have weeks where we pretty well constantly have income coming in. Since at the time, I was only updating our budget weekly, it made things somewhat hard to keep track of.

No matter how hard I tried, I almost always had something get forgotten about which at times actually cost us money. I keep multiple bank accounts for various reasons, but I tend to only keep as much money in my household checking account as I need with just a small buffer. If I forget something, I have a very small time window to catch it.

However, since moving to the paycheck to paycheck budgeting, I am in my budget several times a week to update it. Things run smoothly and nothing is forgotten about.

What kind of income should I include in my paycheck to paycheck budget?

I include it all and ideally, you should as well. In my own budget, this can include things like paychecks, child support payments and even free gift cards I’ve earned. I simply add things like child support and those gift cards to the budget as a new “paycheck” the same way I do a real paycheck.

Ultimately, what you include is entirely up to you, however, keep in mind that money that is not tracked is often wasted.

How to Create a Paycheck to Paycheck Budget

Learning how to create a paycheck to paycheck budget is a lot like weekly budgeting to start. You will need to gather all expenses you have and all income you have. But, where you might normally only gather amounts, you will also need to have the due dates for your bills and pay dates – or approximate dates – before you begin as well.

It can be helpful to have a calendar to keep track of the dates in. I personally use one almost like THIS for my own stuff.

As you pull the dates of your expenses and income, be sure to write them in your calendar so they are easier to keep track of. If you would prefer a digital version, you could simply use Google Calendars.

Once you have the dates, it’s time to create the paycheck to paycheck spending plan. This is easiest for me using a Google Doc or a spreadsheet. Start with your nearest paycheck and bills that are due soonest.

Place your income and then add expenses until your income is either gone or all expenses for that week are covered. If you have extra money, roll it over to the next paycheck; not the next week. Repeat the process using your next pay date, not the next week. If it’s three days, so be it. If it’s ninety days, you have my sympathy but so be it.

What Do I Do If I don’t Have Enough Income for One Pay Cycle?

In the case that you don’t have enough income to cover the expenses from a pay cycle, you have two options. You can either push an expense to the next pay period or you can find a way to make more money.

Here’s the thing; it is perfectly okay to move an expense to the next paycheck but only if it will not cause the expense to be late. If it will, you will only be doing yourself a disservice since you’ll be paying late fees.

So if by moving the expense to the next paycheck, you will cause it to be late, don’t do it and find the money for it instead.

If you really don’t have enough money to survive until your next paycheck, consider selling things you no longer need or starting a new survey company online. You could also offer freelance or gig work for those that may need it.

What Do I Do Once I Have a Surplus of Money?

As you continue to budget paycheck to paycheck, you will notice that you eventually have a surplus of money left in your checking account. Once this happens, you’ll want to start really taking care of business.

This is the perfect time to build your emergency fund, invest to build wealth, pay off debt and more. No matter which you choose to do, don’t simply let the money sit there. Make it work for you and make it help you build a better future for you and yours.