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Early Paychecks Can Help You Budget

Financial stability hinges on your ability to create and stick to a budget… but that’s obviously easier said than done. For example, say you want to devise a monthly budget to help you get a better grip on your spending habits. That’s all well and good if you actually get your entire month’s pay on the first day of the month, but if not, it leaves you scrambling to allocate dollars that haven’t yet hit your bank account.

One helpful alternative is a concept called paycheck budgeting, which is actually something that Binji makes easy! Allow us to explain.

What is Paycheck Budgeting?

First, a quick definition is in order: When we talk about paycheck budgeting, what are we referring to?

It comes down to this: Instead of creating a monthly budget, you create a budget that’s based on every paycheck you receive, assigning each dollar toward various bills, debt payments, expenses, savings, etc.

The idea is that you’re budgeting based on the actual money you receive, not on total monthly income. This may sound like we’re splitting hairs, but actually it can be a very meaningful distinction. For example, with a monthly budget, you might say that you have $500 to spend on food each month… but in reality, you actually have $250 to spend for every two-week period. Budgeting with that level of precision helps you to avoid overdrafting, as well as spending money that you don’t have.

With paycheck budgeting, you can base your financial plans on when your bills fall over the course of the month, specifically in relation to when you receive your checks. Again, the idea is simply to minimize spending money before it actually hits your account.

And ideally, when you budget in a more exacting way, you’ll find little bits of “extra” cash that you can put toward student loan debts, or else just tuck away into savings for a rainy day. Hopefully, you’ll find that paycheck budgeting is a simple yet substantial way to increase your financial health.

How to Make Paycheck Budgeting Work

You may need to make some slight adjustments to ensure that paycheck budgeting works as intended. For example, what if all of your monthly bills are due during the first pay period of the month? If you’re using the paycheck budgeting method, this may leave you with little or no cash left over to eat, let alone buy gas or other necessary items. A good workaround is simply to call some of your service providers and have the billing date changed; if you’re a customer in good standing, this shouldn’t be any problem at all.

Something else to note is that employees who are paid on a bi-weekly basis will have a couple of “magic months” each year when they receive three paychecks, just due to the way the pay dates fall on the calendar. You can use this “extra” money to pay down some debt, or set it aside in a fund you can use if you hit a lean season.

Another helpful step toward better budgeting: Get the Binji app! With Binji banking, your accounts are always at your fingertips, which makes it a little easier to keep tabs on your financing. But even more importantly, Binji gives you an Early Direct Deposit option, which can be a real boon to paycheck budgeters.

Early Direct Deposit is exactly what its name suggests: You can see your salaried income hit your bank account one or two days earlier than you would if you were working with a more traditional bank. So, if you normally get paid every other Friday, Binji can potentially move that up to every other Wednesday… a helpful way to bring a little flexibility to your financial life.

No One Way to Budget

It’s important to acknowledge that different people have different needs when it comes to money management, and budgeting is by no means a one-size-fits-all endeavor. It’s important to find an approach that works for you. With that said, paycheck budgeting is definitely something you’ll want to think about… and as you contemplate it, make sure you give Binji banking a look! Download the app today to see what it’s all about.