How do you know when to move money to savings?
How do you know what balances to keep in you’re checking account?
When I first started out budgeting and working on my own personal finance journey, I googled these questions as well. I was looking for a simple, google auto-filled answer. The problem is that the answer is different for everyone. Here I’ve created a chart that explains how I move money around throughout the month. You’ll see it’s dependent on two things:
1. When you get paid
2. Budget – therefore how much you can float and when you pay large expenses.
First, you’ll notice I get paid only once a month (yes, it was very hard to get used to), and at the very beginning of the month. This is convenient for my budget because I have it set up so I start at “full” and work through my monthly expenses before moving money to my savings account (emergency fund) or funding other accounts.
If you get paid bi-weekly, or on some other schedule, your schedule will likely still be similar to mine, but you may mentally (or physically!) allocate different parts of your paychecks to different monthly expenses.
A few other things I want to point out…
1. I have my credit card due a few days after my paycheck
There are a few reasons for this:
- If I have a large expense on my credit card, I get paid a few days before it is due so I have no excuse not to pay it
- I give myself a few days between paying rent (biggest monthly expense), getting paid and paying my credit card so if I needed to move money around I could.
You are usually able to choose the day you want your credit card to be due (it goes in affect the month or two after you change it, so you can’t put it off forever). You should think about when a smart due date would be, based off your monthly money calendar, and contact your bank to change it.
2. I have a deep budget check-in half-way through the month
I look at every transaction on my credit card and reflect on how I’m adhering to my budget. It gives me the chance to make adjustments and keep myself accountable. Especially because I’m paid once a month it’s too easy to “set it and forget it”
3. I pay rent a few days early
Paying rent a few days early can really make you a standout tenant. It can be the difference between raised rent between leases.
I’m interested in hearing your monthly-money-movement-management techniques! If you would like help creating your own monthly chart for FREE – contact me!