Budgeting is quite challenging, especially when you are on a once-a-month income plan. Depending on the type of work you pursue, your income plan may be weekly, bi-weekly or monthly. If you are a freelancer, your income plan would more often than not be weekly.
However, full-time employees get money on a monthly basis. Budgeting is essential for everyone regardless of the income plan you are on. However, the way you handle your budget may differ. For instance, a freelancer will make a weekly budget, while a full-time employee will make a monthly budget.
If you have decided to shift from freelancing to a full-time job, you will certainly find budgeting intimidating. Because you are in the habit of making a weekly budget, you can overspend as you receive money for the full month and end up running out of money in the last week.
How to make a budget when you are on a monthly income
It is great for many people to get monthly income because they are likely to have some money when an emergency crops up. This may not be possible when you are on a weekly-income plan. However, this may have a drawback too. You can overspend money and end up falling short of the cash you need to meet other needs. Here is what you can do:
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Pay all your bills on time
The best way to make the most of your money is that you set aside money for the bills you need to pay them off. Arranging money for all your bills beforehand will certainly prevent you from falling behind on payments. The same thing applies to debt obligations.
If you have taken on debt, you should set the dues aside, so you do not struggle to keep up with payments just because you fall short of money. Utility bills are generated on different dates, and hence they all have different due dates.
For instance, you may be liable to pay your mobile bill in mid-month while the electricity bill at the end of the month, but they both are generated at the beginning of the month. It is not necessary that you have to pay all your bills on the set due date.
Paying them in advance will not cause early repayment fees, unlike in the case of debts. Just fix a single day for the payment of all bills, if possible, so you do not struggle with monthly payments.
By setting aside money for all of your fixed expenses, including rent, you will know how much you are left with that you can use for other expenses like groceries, dining out, and so forth. You will certainly cut your coat according to your clothes when you have a clear idea of how much you have to spend freely without compromising your essential expenses.
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Know when you need a loan
You may likely need to stretch a dollar because sometimes you may need additional bucks for any reason. However, sometimes you may simply be tempted to meet the cost once and for all. For instance, you need a laptop worth £850, and your monthly income is £1,000.
You may forget to cover other costs like food, travel expenses, or emergency bills. You may be able to pay for this one-off cost if you see cash coming in, and you can manage with £150 in the meantime. Finances are the trickiest to understand, so be careful about money management.
You should take out a loan for bad credit in such a situation. You can easily spread the cost out. Though you would have to pay interest, it will save you from ruining your budget. However, it does not mean you will take out a loan to dine out or buy anything you do not need urgently. You must know when the ideal time for taking out a loan is, so you do not face any financial complications.
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Use cash for spending as much as possible
To be in control of your budget, you should use cash for most of your spending. It does not mean you cannot use your credit card, but you often add that expense to your budget and end up overspending. Therefore, it makes more sense to use cash.
You will have a clear idea of how much you have spent, so you will unlikely run out of money at the end of the month. To be more organised with your cash-spending strategy, you should create envelopes with categories of expenses like food, travel, fixed expenses, shopping and entertainment.
You know how much you pay every month on utility bills, rent, etc., so you can straightaway put that money into the fixed expenditure envelope. Based on the previous months’ food expenses, you can estimate how much you need for food, travel, shopping and entertainment.
This strategy will help whittle down the chances of overspending. When you go shopping with some cash, you will be less tempted to succumb to your temptation.
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Plan for your infrequent purchases
Because you are not going to pay for certain kinds of purchases, it does not mean that you will not create a budget around them. There are many expenses like car maintenance or buying a gift on a birthday occasion. You should plan around these expenses too.
Try to stash away money for these expenses gradually so you do not run out of money at that time. In other words, you can say that you should have a pot for irregular expenses. However, note that it is not an emergency cushion. Because it involves saving money for unforeseen expenses like your car breaking down, your laptop needs a repair, or your tumble dryer has stopped working.
You will have to decide on a fixed percentage of the money you can stow away based on your monthly income. It could be 10% or 20%. Well, if you are not earning too much money, you should still try to save some of your money. Even a little contribution can help tide you over.
Though it does not sound too much or an impressive contribution, do not forget that many a little makes a mickle. To identify how much you can save every month for unforeseen expenses, you will have to evaluate your outgoings, and if possible, you should cut down on your discretionary expenses. Careful planning around your expenses will certainly help you make the most of your budget.
The final word
If you are on a one-month income plan, you should carefully analyse your spending so you do not end up running out of money, especially when you need it most. Pay off all your bills on time, set aside money for unforeseen expenses, use cash whenever you are to pay and plan for your infrequent purchases.
These steps will help you manage your money optimally. However, you may still need to apply for loans for bad credit with no guarantor when an emergency crops up. Make sure you borrow money from a lender that lends money at affordable interest rates, and you can repay the debt on time.
