Where Did All My Money Go? – Part 2

A jar full of coins, seen from the top.

In this article, I’ll discuss how to create a two week spending plan so that your money will last until the next payday. (For tips on determining your expenses, see part 1.)

Let’s assume you’ve now figured out your spending, and your monthly fixed expenses look something like this:

  • Mortgage/Rent                                $1,100
  • Groceries                                            $   400
  • Power                                                   $   105
  • Heat                                                      $     95
  • Cable/Internet                                 $   150
  • Cell phone                                          $   105
  • Car insurance                                   $     75
  • Credit card payment                     $     60

Total:                                                     $2,090


I know this is not a comprehensive list, and I also know that it doesn’t include anything like entertainment or unexpected expenses.  I have included only fixed expenses. These numbers also represent a single person living alone.  When you calculate your own numbers, make sure you include all household income, as well as all fixed expenses related to children, such as daycare, soccer, etc.

So you now know that your fixed expenses total $2,090.  Let’s assume that your annual income is $45,000 and you get paid twice a month.  Taking into account tax deductions, CPP and EI contributions, you would probably be taking home approximately $2,900 per month, give or take, which is $1,450 per cheque.  I would suggest that you divide your monthly fixed expenses in half, which is $1,045, and set aside $1,045 out of each of your two pay cheques to pay these bills.  I actually have a separate bank account where I keep all the money for my fixed expenses.  This account is not linked to my bank card, so I can’t accidentally spend it.  And I also know that I cannot take money out of this account for anything else.

Once you’ve deduced your fixed expenses from your cheque, you are left with $405 out of each cheque to pay for all your other variable expenses, like gas, entertainment, etc.  This amount is what you can spend over the next 15 days until your next cheque.

The final step is to divide your $405.00 in half once again.  This gives you $202.50 to last you for approximately 7 days until your next paycheque.  Keep $202.50 in your account that’s linked to your debit card and then move the remaining $202.50 into your savings account.  If you don’t have a savings account, you should get one.  Just find one where the bank fees are not too high.

Okay, now all your money is divided up.  Now comes the hard part – the discipline!  You must have enough discipline to spend only the $202.50 during the first week.  If you can exercise that discipline, you will be rewarded with $202.50 in your savings account to spend the next week.  And if you were really disciplined, you might even have some of that original $202.50 left over!

I also suggest that you always put some of this money away into long-term savings, as well as short-term savings.  I know it’s not easy, but it really needs to be done.

Please note that this is a very bare bones outline of one way to manage your paycheque.  I know that I have made this seem very simple and straightforward.  I also know that people have many more expenses than what I’ve listed here.

There are many different methods out there.  I have chosen to write about this one, because this is how I manage my money and it seems to work for the most part.  Having said that, there are certainly times when we’ve spent too much in one week and had to stay home and watch TV the entire week before payday because we blew two weeks’ worth of spending money in one weekend.  But live and learn!

I hope this method helps you make your money last until the next payday.  Good luck!

Article by freelance writer, Sharon Skwarchuk.

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