It’s Payday!! Non Budgets & Allocations…See Where My Money Goes.

The moment I have been waiting for all month…It’s payday (technically the 20th)!!

Image result for you get a car meme

Ok, Ok – It isn’t quite that much that I can afford to buy you all cars.  🙂

As I have mentioned in previous posts, I get paid only once a month (minus the few month shit show I cursed upon myself).  Because of that, payday is like Christmas around here.  On the eve of, you can often find me baking cookies, caroling from door to door, and waiting for ol’ St. Nick to electronically deposit my check as the clock strikes midnight.  It’s a BIG deal!  But once it’s here, what  do I do with my hard-earned cash?

Well, let’s start with a little confession...I don’t use a budget.  I know, I know – how can I write about FI without a stinkin’ budget?  It’s just not my style.  But, don’t you worry, my finances are not in complete anarchy.  I have a non budget system that has worked pretty good so far and it all started with tracking.

At the end of last year I began tracking my spending.  Every dollar I spent was put into my handy-dandy spreadsheet and tallied up at the end of the month.  I thoroughly enjoyed filling in each blank spot (yes, I’m a nerd) and seeing the grand total automatically tallied at the end of each month.  What I didn’t enjoy was seeing how much money I was wasting shopping all high falutin at Whole Foods and enjoying lunches out with my day drinking gals – the flight attendant life creates many occasions to sip wine at 11am 2pm on a weekday

Personalized Custom Engraved Flight Attendant Good Day, Hard Day, Don't Ask Funny Stemless Wine Glass, Beer Mug, Pilsner Glass, Coffee Mug
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Life was expensive!  Money was pouring out of my wallet, into my glass, and down my gullet.  You see, when your job is extremely flexible, you can pretty much find any reason not to go.  Weather sucks, dog is lonely, boyfriends neighbors sister has a birthday…all great excuses to be lazy.  With a lazy girl schedule comes an emaciated paycheck.  Though I wasn’t scraping bottom, I knew that my days out were time that could better be spent working and making money instead of eating it.

I decided to buckle down and get serious about my savings.  I promised myself I would work 100 flying hours a month and in doing so I have created a pretty steady income compared to years prior when I fluctuated between 40-60 hours a month.  I literally bumped my income about 50% causing my savings rate to jump to 75%!!  

But back to the non budget…

Being its payday, I thought it would be a great time to walk through a flow chart of my income and how it gets dispersed to my various accounts.  For the sake of this breakdown, we will be talking about my flight attendant income – no side gigs or other monies included.

First off, by the time I get my paycheck, several deductions have already been made:

  1. 401k – 20% until the end of the year when I bump it up if needed in order to reach the full 18k.  My company matches an additonal 9.6% of my income – cha ching!
  2. ESPP – $300 per paycheck.  We buy the stock at a 10% discount. 🙂
  3. HSA – About $190 per paycheck to max out at the end of the year.  Our company gives us $400 at the start of the year to participate + $250 to participate in a wellness program.  That’s $650 right off the bat!!

Next, after all that is taken out, the rest is up to me.  I set up 4 direct deposits to different accounts which in turn creates a little fence around my spending.  

  1. Savings 1 – $1000/month at a 4% interest rate (compounded monthly) up to 25k
  2. Savings 2 -$25/month in the same bank as above…thanks, credit union!!  This account is close to the maximum 25k but I still need a direct deposit to qualify for the 4% so I only add $25 a month.
  3. Investment accounts – $500/month (brokerage and Roth IRA)
  4. Checking account – the rest!

So you see, I guarantee myelf $1525/month of savings (in addition to the pretax investments above).  My savings and investment accounts are funded first and whatever is left over goes directly into my checking account.  Due to my expense tracking, I know that my spending is around $1500 a month so I set that as my fence perimeter.  When the last of my paycheck is deposited in the checking account, one of the 3 scenarios below occurs:

  • If the balance starts at $1500 I know I am in a good spot.
  • If it’s less, I know I need to buckle down that month – no unnecessary spending!!
  • If my balance is more than $1500, I skim the extra off the top and throw it into my Roth (until it is maxed), my investment account, or my travel account if a trip is coming up (I don’t let money sit there due to the abysmal interest rate).

***One thing I NEVER do is take money from my savings or investment accounts.***

 

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If I am in a pinch, I use my credit card for points and pay it off in full with the next paycheck to avoid added interest.  If it means I have to pick up an extra trip to afford it, I will.  The ONLY reason I would touch my savings is for a down payment on a property or a medical emergency.  I’m strict that way.  🙂

So what do you think?

** Do you have any exceptions to touching your savings?  Do you break down each expense in a budget or do you fence your spending like I do?  Do you need help creating a fence for your spending?  If so, please reach out!  🙂 **

Until next time…

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17 thoughts on “It’s Payday!! Non Budgets & Allocations…See Where My Money Goes.

  1. I’m like you. I don’t have a strict budget but I automate almost everything so I don’t have to think about it. I get paid every two weeks so it’s consistent so I don’t worry too much about fluctuations. I too don’t dip into the savings accounts either and the only way I would is if the stock market cratered and thought I could buy some super cheap stocks. Otherwise I hold on to it.

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    1. Yes – good point. I would definitely take advantage of that as well!!

      Getting paid only once a month makes me so anxious for the next month! It is super hard waiting to be FI. 6 years to go (ideally) which is 72 months and 72 paychecks to go. That seems painfully faaaarrr away! Ill just have to take it step by step…only 25 days to go to my next paycheck!! 🙂

      Thanks for stopping by!!

      Liked by 1 person

  2. First off, nice job with your savings.

    Secondly, what bank gives you 4% for a savings account? That is pretty fantastic.

    We do have a budget, but we aren’t always good at sticking to it exactly. There is a fence around our spending though, because I move money off to savings as soon as it hits our account and it never moves back from there – only forward and on to brokerage accounts or 529s.

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    1. Thanks!! My bank is the credit union for my company. I know it’s insane – we have had the same rate for at least the past 6 years. 4% compounded monthly. There are a few caveats. Technically it is a checking account. They require 15 debits a month and one direct deposit. I have a trick for the swipes – I use a square reader to debit then deposit back into my account. Square charges 3% per swipe and the least you can charge is a dollar. It costs me 90 cents a month (between both accounts) to make my swipes and meet the requirements for that rate. Not bad when I am currently bringing in $100/month in interest! 🙂

      Glad to here you fence your spending also. Since I am the only one to account for, a budget isn’t necessary for me. When I have lived with others, a budget made more sense. And awesome on the 529’s! Your kids will thank you. 🙂

      Thanks for stopping by!

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  3. I think stashing that cash before it ever hits your own personal checking account is the smartest thing, possibly ever.

    I started budgeting for the first time in my life two months ago. I can appreciate that its not for everyone and glad to see that your making the non-budget life work for you, savings wise. At the end of the day– its all about whatever is working for ya. And the point is probably saving more money, which is clearly what you are doing. Schwing.

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    1. For sure! It is all a personal choice.

      Budgeting is awesome…specifically if you have a spending problem or wonder where your paycheck went at the end of the month. Some people keep their budgeting ways long after getting out of debt because it is the boundary that they thrive in. My eye opener came when I was tracking my money. That was all I needed to kick it in to gear. Whatever works!! 🙂

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  4. Keep rockin it lady!!! I think the best form of savings is money you never seen in your main account. Im still working on making tweaks here and there, especially for goals next year, but right now I have my 401k (doing 10% and my match – sadly only 4%) kicks in in Dec. I contribute around $1,500 to my brokerage account (but it goes to my checking first) each month, and 400 for travel and 250 for my shit is getting old fund. Soon I might bump up my 401k, and have money direct deposited into the other accounts so it never even appears in my checking account.

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    1. Girl – I know what your rent costs so considering that you are kicking ass! YEAH for you on the match starting!! Free money is worth a celebration. 🙂 I love your Shit is Getting Old Fund – I should probably start one of those for my poor 16 year old car…but first I insist on an epic road trip as her last hurrah! I’m obviously in denial of her life span. Keep that travel fund up! That is the one fund I never mind contributing to – after all, that fund has contributed the most back to me. 🙂

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  5. I always enjoy reading how other people structure their finances – every method of budgeting is slightly different. I would argue that you DO have a budget, just for a total monthly spend – not a breakdown of individual costs. :p

    We have a “spending guideline” I guess you’d call it, as our budget. We don’t crunch numbers every month fretting on needing to spend X on the groceries and Y on clothes. Only way a spending guideline successfully works for us is to over estimate expenses – we already have cash left over that way and that always feels good!

    Jasmin

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    1. Yes, I suppose it all depends on what you see when you hear the word budget. For some reason that word makes me think of line items and spending limits. But I can see how having just having the number of 1500/month for overall expenses could be a budget in itself or like you said “a spending guideline”. I just can’t imagine going line by line and saying only this much for groceries and this much for car gas. Too limiting for my purposes but, understandably, necessary for others. 🙂

      Thanks for stopping by!

      Liked by 1 person

  6. 4% is pretty bad ass. Which Credit Union are you playing with? 🙂 I have one with Consumers Credit Union that I used to use, and I could get 3% on up to $10k with a certain amount of debit transactions – but I shredded the debit card when I switched to a different strategy. Whoops. lol.

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    1. Haha – mine is with my company. You have to be an employee or family to join. We get 4% up to 25k but can have two accounts. We also have to do debit transactions but I found the work around by using a square reader. 15 swipes for $1 each at a 3% interest rate = 45 cents per account to gain 4% on the overall balance. The swiped charges go back to my account as income. Totally worth it!! You need to get your card back!!

      Thanks for taking the time to comment. 🙂

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  7. sunny

    I too don’t function well with a formal budget. What I use is something I stumbled on five years ago – a google document that looks like a calendar month – with cells formulated to keep up a running balance. Thus I can plug in my weekly paycheck amounts (yes, I’m lucky – I know. I used to get paid monthly!) and my regular expenses and see at a glance at the end of the month how much money will be left over to sweep into savings. (Working on putting a set amount into savings before the money hits my checking account.) So all my monthly bills and expenses show up on days throughout the month, and if I want to see if I can afford to replace my sneakers – or plan a day trip somewhere – I put in the description and the amount, and I can instantly see if the balance at the end of the month will be doable or if I will be going negative. My goal is to spend the least amount possible so that there’s money leftover to sweep into savings at the end of the month. I’m a visual person and having this in front of me when making a spending decision has really changed my spending.

    I used to be tied into an “account for every dollar ahead of time” budget and that felt so restrictive to me. I would rebel against my own budget and spend what I knew was in my checking account so I could avoid looking at my budget. Naturally, that led to no savings and to a feeling of defeat. I enjoy this way of handling my money that lets me get excited about having money to sweep into savings. Any advice on how to begin savings so that it’s automatic? Have you always done it that way?

    PS: A close friend who is a CPA scoffed at my simple document until she tried it. Then she sent me an email that she’d been up until 2 AM entering amounts into her own google document to track her money.

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    1. Hi Sunny! I use a similar tool in google docs. I have my whole years assets and expenses on one sheet and multiple tabs for other years. This way, all of my finances are in one place and it is easy to compare months, years, and eventually decades! 😉

      I like that you said “I would rebel against my own budget and spend what I knew was in my checking account so I could avoid looking at my budget. ” – this is a huge problem that often goes unaddressed. When you restrict yourself so much you feel the need to be naughty, something is wrong in your process. Same as going on a strict diet…eventually the cupcake calls! Your statement is the best example of why automatic savings is key. As i’m sure you read, I never touch my savings. I look at it (often!) but I consider it my future life’s money not my present life’s money.

      The first step to automating your savings would be to start small. What do you know you have left in your budget each month? If it’s $100 automatically save half ($50) and keep the rest for some kick back time so you can have fun. Being you get paid weekly, you can divide that number in 4. If your company offers direct deposit, have it automatically deposited into a separate savings account before the balance makes it to your checking. Out of sight, out of wallet. 😉 If your company does not do direct deposit, you can still set up automatic draft to your savings from your checking through your bank. Once you have that going, it is time to really look at your budget. What can you save on? Where can you cut costs? You said you use your spreadsheet for regular expenses. Does that include every dollar spent? If you don’t track your spending, now is the time to start. I found so much wasted money by looking at every line item and realizing I could be cutting back in certain areas or swapping for lower cost groceries (looking at you, Whole Foods!). I also started turning my router and cable off at night and when I left the house saving me over 20% in electric costs per month. All those dollars add up and allow you to save more in your automatic savings. At the end of the month, if you have extra money, sweep the rest into your savings. Bonus!!

      I hope this helps! Feel free to reach out at any time and keep in touch to let me know how things are going. Once you have a good amount saved (and an emergency fund fully funded) you can roll some of your savings into investments. Then the ball really gets rolling! 🙂

      Thanks for stopping by and taking the time to comment. Keep in touch!

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  8. Pingback: Tracking spending is the best thing you can do for your finances - Centsibly Rich

  9. Wow! Super impressive! I’m jealous of your savings account interest and your employer matching. I also get paid only once a month, but I function with a super strict budget and monitor every dollar in/out against that budget. I love your idea of making a fence around your spending, such a good visualization!

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    1. Well, I used to be more extreme in my tracking…down to every cent I picked up off the ground! 😅 Now I just track my credit card spending and, if I remember, cash in quantities over $10. The fence definitely helps, but also the goal of financial independence. I’ve lightened up a bit with outside expenditures like travel and restaurants but for the most part I am still on track. 🙂

      Thanks for stopping by and taking the time to comment!!

      Liked by 1 person

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