We all are familiar with micropayments; if you aren’t then I’ll do a little explaining for you: a micropayment is a teeny, tiny bit of money (usually virtual) that is used to buy or sell a good or service. To put it in perspective, Paypal defines a micropayment as a payment that is equal to or less than five dollars.
I’m sure you’re all thinking of those pesky ‘in app purchases available’ flavor texts found brazenly posted all over your favorite smartphone app. (Pause here for a group eye roll.)
But let’s look at it in a different light! What if you use micropayments to pay your bills? Is that crazy or what? Break it down! I get paid every week, but my bills only come once a month. The timelines are all messed up! That makes it hard to budget. After about 3 months of trying to get my previous debts abolished, credit score up, manage multiple bank accounts, and save for an international trip- I’ve managed to come up with a system that works for me.
You may be thinking, this is stupid; everyone knows this! Well I didn’t. I figured out this system on my own with lots of trial and error, phone calls, and asking for help.
I call it THE BUDGET PLAN I WISH I KNEW BEFORE I TURNED 24 AND REALIZED I KNEW NOTHING ABOUT ANYTHING!
Step one: Pay yourself first. Always. No matter what. Set up an automatic withdrawal, so that a fixed amount gets sent to wherever it needs to go so that you won’t touch it. (YOU KNOW YOURSELF, QUIT PLAYING.) If you need to open multiple bank accounts to do so- do it.
In my situation, I have an online savings account with Ally that I do not have a debit card for. Because I don’t have a card it means that it takes about 3 business days for any money to enter or leave the account. Knowing that I have to wait three days (or more, on weekends) if I want to do anything with my saved money is a great mental roadblock for me. Plainly put- it’s a hassle and a half to wait on it to show up in my regular checking account. Because of that I don’t ever feel tempted to spend it.
Step two: Lower your monthly expenses. This is kind of a no-brainer. Figure out which services you’re paying for and decide if you really need them. If you do need them (for example, car insurance, rent, phone bill, etc) see if there is another company you can switch to, or a deal you can cut out with your current provider.
I switched to a prepaid cell phone provider. I gave up my paid satellite tv subscription to only a basic internet account so I can stream music, tv, and movies from my xbox, phone, and laptop. I truly don’t feel any FOMO.
Step Three: Calculate your weekly (or biweekly) expenses. Figure out how much needs to be paid and divide it by the number of paychecks you receive before the bill is due.
For example, my phone bill is a flat rate of 48.55 monthly, after taxes. Let’s say I get paid 4 times between now and when it is due. $48.55/4=$12.13. Which means that each Thursday I will have to pay my phone company $12.13. Usually I round up to the nearest .50 or 1.00. This ensures that not only does my bill get paid early or on time- but it also hurts my wallet a lot less to pay $12.50 for 3 weeks and $11.05 the week before, than it does to pay $48.55 once a month.
Step four: Do this with all of your bills. Keep a note of them on a calendar, specifically saying ‘$xxx to xyz-company’ on the day you need to do it.
You will most likely find that you can pay the small portions of each bill weekly, pay your savings, and that you have extra money left over! Hashtag No Stress Ever.
Step five: Check your bank statements daily and create a budget. It sounds obsessive, but I promise, it will give you complete peace of mind knowing that you have control over your cash flow.
I do this every morning immediately after I wake up. It only takes me 10 minutes or less- I promise. I check the balances of each of my accounts. I make sure that my transferred/transferring money is still making its way to where it needs to be. I then take the balance of my checking account and divide by how many days I have left til payday to get my daily budget. For instance, if I have $200 in my checking account and I get paid in 4 days: 200/4=50. This means that at the most, I can spend $50 a day and still not have to worry about that embarrassing “it says declined” talk with the cashier during my next shopping trip. (Which, luckily, hasn’t happened in quite some time.) At the end of the week, whatever money is remaining in my checking account, goes straight into savings. (Often, I pay myself twice a week.* Refer to step one.)
Step six: Profit??? Cool points for adulting, being responsible, and handling your finances on your own.
This is my extremely simple way to keep track of my money coming and going. Give it a try and see what works for you! Feel free to leave a comment if you do anything similar or have any tips that you want to share.
Later, y’all! 🙂
* Banks have a 6 transfer a month limit. Some may honor your transfer for a considerable fee. Although, mine doesn’t.