One of the most important budgeting trick I learned this year is to live on last month’s income instead of the present month’s. When I first heard it I thought it was impossible to do. After all, most of the time it feels like we’ve been living from paycheck-to-paycheck and money runs out quicker than you can breathe. But when I had the opportunity to save enough a few months back, I quickly turned this advice into action.
But what does living on last month’s income mean? It’s really simple to explain. It means that what we have been using to buy our groceries and pay our bills for the month of July we got from our salary the previous month. Meaning our earnings for the current month of July remain untouched until the end of the month after which I will withdraw it in full so that we can use it for the next month which is August.
The idea is so simple but its benefits are tremendous.
1. I have a clear idea how much our monthly budget is. Although I wanted to track our expenses for the longest time, it was just too time consuming for me to write every expense down. Knowing at the start of the month how much we can spend for our needs made tracking down our expenses unecessary. As long as we stay within that month’s budget I know everything is alright.
2. We learned to tighten our belts. Before I never had a clear idea of how much we were spending every month. But one time I tried to add it all up, I was mortified at the figures that came up. It didn’t help that I was a freelancer and money can come in any time of the month and not on a twice-a-month basis. So whenever the need arises I just go to the atm and withdraw. Now that we know how much our limit for each month is it is easier to budget our money. After all the bills are paid, I just divide how much is left and budget that within the remaining days of the month. I can decide if I can really afford to buy those Rhyolite Beads I love or should I just wait for the next month. Since food is our utmost priority, it’s not hard to decide on which purchase we should spend our remaining budget for the month.
3. We saved on bank fees. We get paid through Paypal and it is not free to withdraw the money we have from Paypal to our local bank. For each withdrawal I get charged P150. Before, I withdraw a minimum of twice a month and a maximum of four times a month. The sum of P150 may sound small but this sure adds up in a year. Now, I only need to withdraw once a month which has saved us in banking fees.
If you have tried to budget your family’s money to no avail then why don’t you try my simple budgeting trick? It would be hard at first especially coming up for one month’s worth of extra money but I assure you the sacrifice is worth it. You won’t have that feeling of living from paycheck-to-paycheck anymore and you’ll be more relaxed since you know that you’re well covered until the end of the month.