Financial Bills and Budgets

[Amaury]

Do you guys keep track of your bills, budgets, and expenses, and if so, when do you start the pay period over? Monthly? Payday? (If you get paid bi-weekly.) Etc.?

My mom has always used an Excel spreadsheet for this, and once I started having my own money, I followed in her footsteps and started my own. It basically works as follows:

In the spreadsheet, both her and I take bills out after being paid. Even if the bills haven't been taken out or sent by the bank yet, we just take them out at the beginning of the period. We basically act like we don't have that money since it is for bills. Then my mom has a few budgets that we try to stay within, such as fuel and groceries, for the month. Once bills and budgets are accounted for, anything else is put into the unassigned balance, which can be used for anything and is also used if we go over on one or more of the budgets. I don't have budgets for mine, but I do take out the bills ahead of when they actually get paid. And, of course, a new sheet within Excel is made every year.

Focusing on just me here, I get paid roughly every other week. Or twice a month. On some infrequent occasions, if everything lands right, I will get three paychecks in the same month. Since my bills are monthly based, I just put together both of my paychecks, as if I were getting paid monthly. What I'm trying to figure out now is when is the best time to restart the pay period. What I used to do is start the period over on the payday closest to the 1st of the next month. For example, I got paid on the 22nd one month, and since my next paycheck wouldn't be until after the 1st of the following month, I started the new period on the 22nd.

Sometime last year I changed that so things would appear a little more accurate. So, currently, I start the period over on the payday closest to when my bills get taken out, which are the 9th for my truck payment and the 15th for my Microsoft Office 365 subscription. I also have a few repeating monthly transfers set up for the 10th of every month, which I count as part of the bills. One of the repeating transfers puts money into my savings, while the rest go toward helping my mom with some of her bills. So, with the change I did, for example, I got paid on the 6th one month, and since I obviously wouldn't get another paycheck before my bills were taken out, I started the new period on the 6th. For a more recent example, I got paid this last Saturday the 27th and started the new period then. Even though I'm starting the new period on January 27, the period is still the February period. In other words, the money I make each month is for next month's bills, which is pretty standard. The paychecks I've made for January are for February's bills and such. In any case. with both this method and the previous one I mentioned, the dates do vary.

Now, I'm looking at possibly just starting the pay period over on the 1st of each month, regardless of when my last payday was. I'm just curious what other people here do and what they personally prefer. What are the pros and cons of the method you prefer to use?

• Start the period over on the payday closest to the 1st of the next month (variable date)
• Start the period over on the payday closest to when bills or the majority of the bills are taken out (variable date)
• Start the period over on the 1st of every month, regardless of last payday (static date)
• Some other method not listed here

I've been struggling financially just a little bit these last few months due to less hours since it's been slow, though we will start to pick back up again in March, so I'm not really too worried. I'm just wondering if i were to start the period over on the 1st of each month, a static date, if it will make things appear better, at least aesthetically speaking. I have plenty in my savings, but I shouldn't have to transfer money out of my savings to make ends meet when my checking account has been fine all this time since getting my job in July 2019 until most recently. I overdrew my account for the first time ever last week, though by less than $10.00, and I've resolved it since by transferring some money from my savings. The way I have my card set up is if there's not enough money, the card just outright gets declined. (Some people have it set up to where it still goes through, but you have to pay back the difference since there was only enough to cover part of the total cost.) The problem in my case is that this doesn't work at gas stations since the pump has no way of knowing how much it's going to be to top off. Whereas if you go to a grocery store, you know what your total is before inserting your card.

Anyway, a little tight now, for sure. I currently don't have enough for my truck payment now since I spent some money yesterday, so I will need to move some money around. For the next couple of months, starting with this current pay period, I've been forced to change two of my repeating transfers to be sent on the 20th instead of the 10th, though my mom's also been saying I can take a short pause on transferring money to her for her bills for a month or two and just focus on my truck payment, mostly. Besides the truck payment, taking a pause on those transfers would still leave me with my Microsoft subscription and my transfer to my savings. My Microsoft subscription is $7.57 a month, so that one is really of no concern, but I don't even have enough in my checking account currently to cover my truck payment since I spent some money yesterday, let alone both that and the transfer to my savings. If I were to take the truck payment out of the equation, I would be able to scrape by, but the truck payment is very much part of the equation. I don't get paid again until February 10, though my paydays aren't static and vary. Sometimes I get paid on Mondays, sometimes I get paid on Fridays, and sometimes I get paid on Saturdays.

[Rothman]

All I do is keep a running checkbook ledger and then project it out similarly.  I get paid every two weeks and in the projection, I keep my income flat.

I use a credit card as much as possible, so my ledger looks like I only have half-a-dozen regular expenses in a month.  I find using a credit card to control my budget is quite effective (i.e., it shows up on my ledger as a big monthly expense).  Of course, if one cannot pay it off monthly, then one should stay away from credit cards altogether.

I keep a running detailed list of the credit card transactions on a separate tab in the workbook.

Sounds like your pay is irregular, though, and you're just having to make the best guess.  I wouldn't lump it all together in one monthly sum, though.  I'd just use an average for every two weeks and watch it like a hawk since you're having trouble covering your expenses.  Wouldn't help your mother out until after you've got your own bills covered and stop the regular transfers into savings.  I'd make the best guess about what your money's doing in the future and transfer over savings as you can manually.

[kphoger]

Whatever the strategy, one good thing to do is undervalue your expected income and overvalue your expenses.

[Max Rockatansky]

^^^

When I was younger I was far more strict about keeping a paper budget.  Margins were way more thin the further back in time towards 18 I go.  The above model now coupled with reviewing my bank statements monthly now is sufficient.

[1995hoo]

For me, the main strategic thing is that sometimes I time purchases based on when my credit card statements close, so as to push the due date for a particular expense to a later date. We pay all our cards in full every month, but it can still be beneficial to push expenses further out. (Example: My MasterCard statement that will close in February has a significant charge at the dentist. Insurance is going to reimburse a portion of that. So by timing the dental visit such that the charge will be on the statement due in March, I can use the insurance payment towards that month's bill.) Obviously, you can't always defer purchases, especially things like groceries or gas for the car, but I'm thinking more in terms of larger things or discretionary purchases anyway.

One comment for the OP: Use caution when it comes to transferring money out of savings. Most banks impose a limit on how frequently you can withdraw money from savings. There used to be a federal regulation limiting customers to six savings withdrawals per month, but that was repealed in 2020. Some banks still adhere to that rule, some have other rules. The penalty for breaking the rule may vary—some banks charge a fee, some may decline the transaction, some may convert your account to a checking account. Your comment makes it sound like this hasn't been an issue, but it's worth knowing about so that if you think you may have to tap savings, you can try to make one larger transaction instead of a series of smaller ones.

[kphoger]

My wife has income from two sources:  one from her day job as a home daycare provider, and the other from MLM direct sales.  Our budget is based on my income and daycare income only—leaving all MLM direct sales income as extra/bonus/whatever.  This means, for example, that when it comes time to buy Christmas presents for the kids, we don't have to dip into savings.  Likewise, when we go on a trip, we generally just use her "extra" income to pay for it.

[Rothman]

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[kphoger]

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P A Y S
S T U F F
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[Max Rockatansky]

My wife used to pick up extra shifts at the hospital complex in downtown Fresno to make extra money.  It started to become more of a hassle to keep up with certifications so she quit after nine years.  Apparently she was averaging about 12-14k working a couple 12 hour shifts a month.

[CtrlAltDel]

I get paid once a month, nine times a year, so I budget monthly based on 3/4 of my take-home pay.

[ZLoth]

Could some of you older folks tell me about "balancing your checkbook"? What kind of arcane and ancient magic is that? Why should I bother when I can see what few checks I have written have cleared through my phone app? 

In all seriousness... I get paid bi-weekly. While I am salaried, my paycheck can be variable because of additional time that I can pick up working on weekends. My top financial goal is maximizing my 401(k) contribution which is handled as a payroll contribution, and something that decreases as a percentage as the year goes on. (The company I work for does not allow deduction at a fixed amount, only percentage). My secondary goal is getting my home paid off. With the exception of home mortgage and credit card, all of my recurring bills is charged to my credit card to take advantage of the cash rewards, and that card is paid off every month. My mortgage is set up to auto-pay, and the amount is upward to the nearest $100 from the minimum payment because I can invest my money elsewhere due to the interest rate. (Unfortunately, mortgage servicers do NOT accept credit cards for mortgage payments for good reason.)

Anyways, whats wrong with Excel to track these items?

Another trackable item that isn't exactly finance related but still important is accumulated PTO time. One of the last things I want to do is cap out on accumulated PTO.

[Max Rockatansky]

Living paycheck to paycheck certainly was incentive enough to pay obsessive attention to my bank account.  Back when it was necessary to track everything it certainly helped me see where my wasteful spending was and exploit it for potential savings.

[kphoger]

Could some of you older folks tell me about "balancing your checkbook"?

It's so that, when the monthly statement arrives in the mail, you can go ahead and record the purchases you forgot to record earlier...

[ZLoth]

Could some of you older folks tell me about "balancing your checkbook"?

It's so that, when the monthly statement arrives in the mail, you can go ahead and record the purchases you forgot to record earlier...

I really would like to have checks just... go... away. To expedite check processing, critical routing and account information is printed at the bottom of the check. As long as certain governmental entities have you utilizing a third-party processor which add a severe surcharge if you pay by credit card. I would much rather do a electronic funds transfer rather than waiting long periods for a check to clear. Some businesses such as non-consensual towing companies do NOT allow either credit card payments (charge can be disputed) or paper check payment (stop payment issued on a check) for good reason.

[Rothman]

Could some of you older folks tell me about "balancing your checkbook"? What kind of arcane and ancient magic is that? Why should I bother when I can see what few checks I have written have cleared through my phone app? 

In all seriousness... I get paid bi-weekly. While I am salaried, my paycheck can be variable because of additional time that I can pick up working on weekends. My top financial goal is maximizing my 401(k) contribution which is handled as a payroll contribution, and something that decreases as a percentage as the year goes on. (The company I work for does not allow deduction at a fixed amount, only percentage). My secondary goal is getting my home paid off. With the exception of home mortgage and credit card, all of my recurring bills is charged to my credit card to take advantage of the cash rewards, and that card is paid off every month. My mortgage is set up to auto-pay, and the amount is upward to the nearest $100 from the minimum payment because I can invest my money elsewhere due to the interest rate. (Unfortunately, mortgage servicers do NOT accept credit cards for mortgage payments for good reason.)

Anyways, whats wrong with Excel to track these items?

Another trackable item that isn't exactly finance related but still important is accumulated PTO time. One of the last things I want to do is cap out on accumulated PTO.

Gotta keep that cap on, though.  Being right at that cap is advantageous where I work.

[GaryV]

Another trackable item that isn't exactly finance related but still important is accumulated PTO time. One of the last things I want to do is cap out on accumulated PTO.

Our check stubs (you got them on a website when you had direct deposit) showed our PTO used and remaining balance.

Once they changed something in how PTO was calculated - I forget the reason but some portion of it wasn't considered "banked" anymore - and suddenly you had to use up a bunch or lose it. "OK, I'll be gone for the next few days. See you when my PTO gets back in sync."

[J N Winkler]

The OP asks about accounting cycles.  I don't think it matters as long as income exceeds expenses (the "nut" is covered).  One piece of personal finance advice I've always found compelling is to pay this month's expenses out of money earned last month (or earlier), just to avoid the stress associated with coordinating the timing of bill payments/autopay withdrawals with one's paychecks.

[Amaury]

Thank you for the responses thus far, everyone!

So, I've never had and don't personally plan on getting a credit card or line. My mom has told me this is a good thing, something she wishes she was more careful with. I know I get paid at least twice a month, so I do have somewhat of an idea.

To respond to the "balance your checkbook" statement, ours basically looks something like this, using example dates and amounts:

Pay period of December:
Balance on November 30 before paycheck: $450
Paycheck deposited on November 30: $3,000
Balance on November 30 after deposit: $3,450
Bill 1: $500
Bill 2: $350
Bill 3: $800
Bill 4: $350
Total Bills: $2,000
Balance after bills are taken out: $1,450

On December 5, after bills 1 and 2 are taken out, I reconcile:

Bank Balance: $2,600
Outstanding Balance (bills that haven't been taken out yet or checks that haven't been posted yet on the bank side, but are in the spreadsheet since we know that money is already spent): $1,150
Adjusted Balance: $1,450 (perfect, it matches!)
Less Fuel (budget): $200
Less Groceries (budget): $300
Unassigned Balance (can be used for anything): $950

Last year, using a nine-month average, I made roughly $1,700 a month on average. I took out three outliers here, where I got paid three times those months. My bills came out to an average of $1,100 a month. Not counting other expenses, such as gas for my weekly drives for fun, I was still making more than I was spending in bills.

Between September 2019, which is when I started having my first bill after working for a while and when I made my first big adult decision and got my brand new 2020 Corolla (in August 2019) and leased it through Toyota, and the end of my 2020, I had roughly $4,000–$6,000 left in my checking after bills were taken out.

Between 2021 and April 2022, I had roughly $2,000–$4,000 left in my checking after bills, which was still fine. More bills were added in 2020, one of which was my student loans that have been paid off for a few years now, but I was still making enough to build my checking, even after bills and non-important expenses were taken out.

Between April 2022 and February 2023, I had roughly $1,500–$2,500 left in my checking after bills, with a few outliers. In April 2022, I had roughly $900 after bills. In December 2022, I had roughly $1,200 after bills. And in January 2023, I had roughly $1,300 after bills. Still doing fine, though.

In 2023 is when things started consistently dropping below $1,000 after bills were taken out and showing a downward trend, especially toward the end of the year, as previously mentioned, but I was still doing fine until the last few months. Between February 2023 and January 2024, I had roughly $600–$1,000, usually around the middle, left in my checking after bills, with a few outliers. In July 2023, I had roughly $400 after bills. In November 2023, I had roughly $300 after bills. And in December 2023, I had roughly $350 after bills.

And, of course, for this year, I had roughly $200 in January 2024 after bills. And for February 2024, I will have roughly (-)$400 after bills, which is why my mom, who is having no problems, is insisting I take a pause for a while on helping her, and what I will likely do, which Rothman also touched on here. My helping her is currently roughly $250 a month. The remaining roughly $850 is still my stuff. But even if I focus only on my stuff (truck, Microsoft, savings), for February 2024, at least, I will still be left with roughly (-)$150 after bills, which is why I will have to move money around. One thing I've been doing these last few years is that whenever gas for my drives totals $100 or more, I take half of that from my savings to cover part of the costs, but that hasn't been helping lately. Sometimes, when I get clothes at Walmart, I also take half of the cost from my savings. Other things I use my savings for include vehicle maintenance, such as when one of our vehicles is due for more than just a regular oil change and tire rotation, such as fuel injection system cleaning.

I should be getting a cost of living raise in February, which is why I'm not too worried overall. I close at my job, which is where you make money since you don't leave when you're scheduled off, you leave when you're done with everything. Part of the problem is that a few months ago, my job changed things, as it used to be that we had one hour after close to close. When our hours changed to be open later every day a few months ago, that changed to having 30 minutes to close. For the most part, we have been doing that, sometimes even being done early. Even if we're out late, it's by no more than an hour after close, whereas before, we would often get out anywhere up to an hour and 30 minutes after the hour we had. We're now getting a lot of things done when we get there in order to manage this.

I've checked through my spreadsheets. It's not my bills or even gas that's the problem. My bills right now are actually a little less than they were at times in the last few years. For example, my bills were higher than they are now for a while in 2022, and I was still making more money. It's my hours. In April 2023, when I was still doing fine overall, I had to push back the transfers to my mom by a few days in order to get paid first. The same thing basically happened in January 2024, except I didn't catch it. So, there were a couple of transfers it tried to do, but couldn't due to insufficient funds. As soon as I got paid on the 12th, they went through. After that is when I changed a couple of my transfers to go out on the 20th of the month instead of the 10th, beginning with the February 2024 cycle, which haven't happened yet, but now I'll likely just be canceling the transfers to my mom for a while until things improve.

To answer the latest post, that's exactly what I do. For example, the money I made in December 2023 was to cover January 2024's bills that I took out before they were actually taken out, which is why I changed from starting the cycle over on the payday closest to the 1st of the next month to the payday closest to when the majority of my bills come out. But as per my OP, I'm now wondering if it would be better just start the cycle over on the 1st of every month, regardless of when my last payday was, to have a static date since the previous month's work deposits are for next month's bills. Then pay periods would also match, such as the January 2024 period/cycle being January 1–31, 2024.

Using the previous method I used to use prior to 2023 of starting the cycle over on the payday closest to the 1st of the month, the pay period of December 2021, for example, looked like this: November 20, 2021–December 18, 2021. Using the current method I'm using from 2023 onward of starting the cycle over on the payday closest to when the majority of my bills come out (9th of the month), the pay period of March 2023, for example, looked like this: February 25, 2023–April 8, 2023

[Scott5114]

Since my income is through self-employment, I use a double-entry accounting system to track the finances related to that. Once we move, I'm planning on tracking personal finances through double-entry as well.

[Rothman]

Since my income is through self-employment, I use a double-entry accounting system to track the finances related to that. Once we move, I'm planning on tracking personal finances through double-entry as well.

Hm.  I'd worry about the timing getting off and overdrawing a checking account.

[Scott5114]

The way my accounts are set up, that isn't likely, and if it does happen, there is no negative consequence (the credit union automatically transfers enough from savings to cover the transaction and charges no penalty to do so).

[Rothman]

The way my accounts are set up, that isn't likely, and if it does happen, there is no negative consequence (the credit union automatically transfers enough from savings to cover the transaction and charges no penalty to do so).

Meh.  To each their own, then.

[on_wisconsin]

The way my accounts are set up, that isn't likely, and if it does happen, there is no negative consequence (the credit union automatically transfers enough from savings to cover the transaction and charges no penalty to do so).

That's also somewhat risky to have spending and saving accounts linked, if your spending account info ends up in the wrong hands someone could easily drain both accounts. Personally rather risk NSF fees or being declined and having to transfer money (also a good budgeting trick), then having multiple accounts emptied...

[kphoger]

detail

Sounds like you have your head on straight, as far as I can tell.  You 'cover the nut', as Jonathan put it, and, when you noticed the margin growing slimmer, you were able to determine the cause.

The only other thing I'd suggest is to look for ways to cut 'soft' expenses.  If you enjoy soda or beer or whatever, then consider cutting down to once or twice a week.  If you eat out a lot, then consider cooking at home more.  If you cook a lot, then research cheaper meal plans.  If possible, and if it will make a difference (depending on your pay structure), keep the thermostat set to cooler in the winter and warmer in the summer.  Evaluate your internet package and see if a slower (cheaper) speed would be adequate for your needs.  Et cetera.

[DTComposer]

So, I've never had and don't personally plan on getting a credit card or line. My mom has told me this is a good thing, something she wishes she was more careful with.

Since you seem to be very conscientious about your budgeting, having a credit card (and using it, and paying it off every month) can be a good thing. For better or worse, it establishes/strengthens your credit score, which is helpful when considering big ticket items (car, etc.) - you can often negotiate better deals with a stronger credit score.

Also, having a card with a good rewards program can be a big benefit - we fly somewhere about once a year and the rewards from one of our cards pays for the tickets, and the rewards from our other card pays for about 1/3 of our clothing expenses.