Featured image credit: https://beyondspx.com
When I first started working, holding a physical paycheck in my hand wasn’t necessarily the cliché reward I thought it would be. Instead, it was more of a signal that I could buy things again. Back in the debit card days, I would say goodbye to $100 of my paycheck at Sephora almost immediately. I would put some money into savings, and at the time I was paying off some student loans, but it was never strategic.
Having a credit card has completely changed my mindset. Now, payday is a signal for me to distribute the money I don’t need to spend among my goals. With Beyoncé’s voice singing, “Wait, I hear you just got paid. Make it rain energy,” in my head, I open my checking account to make sure the money actually made it in there! You laugh, but one time that happened and I swear the world stood still for a few hours. If you receive a physical pay stub from your employer, make sure the number matches what was added to your bank account.
The first thing I do is type the number on my checking account balance into my phone’s calculator. Then, I determine how much needs to stay in checking for any fixed expenses like rent, utilities, etc. Take a look at what has gone through since your last paycheck to ensure everything looks correct and you haven’t been hacked.
If it’s not a paycheck that needs to be saved for rent, I go to my credit card statement and assess the damage. I subtract my credit card balance from the big checking account number. I almost always pay my card off in full if I have the funds to do so. Sometimes I wish Discover would let me pay off the pending payments too, so I’ll include them in my calculations just for fun!
Now that I have a better idea of what I’m working with after my fixed expenses and credit card are accounted for, I determine how much I can put in savings before my next paycheck. This time, I have $700 available to save. First, I move this amount from my checking account into my emergency savings account since they are with the same bank. Then, I distribute this amount to my high-yield savings accounts.
This is a good time to check in on your savings goals. Right now, my short-term goals of saving up to invest more and moving are the most pressing. My intermediate-term goal of buying property is nicely funded for now, so I’m going to leave my LendingClub high-yield savings account untouched. I set up a transfer so the $700 will be added to my SmartyPig high-yield savings account. This takes a few days to settle, but I like doing all these moves when I get paid on Friday mornings so they can make their way through the system faster at the beginning of the next week.
This money isn’t just going to sit in my account though, it’s going to be distributed to my two separate short-term goals using SmartyPig’s goals feature. This way, I can clearly visualize how much I have saved for each goal and how much more I have to save until they’re both funded. My goal for investing another $2,000 lump sum into my Charles Schwab brokerage account will need to be satisfied sooner than my moving goal. I have $500 out of $4,000 saved up for moving right now, so once my latest savings transfer has settled into my SmartyPig account, I plan to move $200 of it into the moving goal and $500 to start saving up for investing.
Depending on which payday this is, I will also take a look at my spending for the month, but I’ll save my findings for next time when we look at my budget. Stay tuned for more of my investing discoveries!
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