Cutting it close – 5 tips for staying out of your savings account at the end of the month
At the end of every month it seems that my bank account gets very very close to empty. I have done well (or maybe not) sticking to a budget for the month but psychologically as it approaches zero I start to freak out. This often causes me to transfer money from savings to my checking just to have some ‘padding’ and this too can result in overspending. Here’s some advice for making sure you stay out of your savings account:
- Give everyone on your account (yourself, your spouse, etc.) an allowance at the beginning of every pay period. This is money that’s budgeted for as an allowance, but then used for whatever YOU want. My wife and I have setup a separate checking account just for us that we put this money in. This gives us a little padding outside of the normal budget
- Don’t panic. If you’re using something like Mint to track expenses and the amount left in your budget buckets is equal to the amount of cash in there just be confident that by payday you’ll be alright if you stick to that budget.
- Put a padding in your checking account. Most folks can’t afford to do this – and that’s fine – but if you have an extra $250 or $500, just drop it in there. Use discipline to not spend this money unless really necessary but it will give you a little psychological piece of mind by keeping you from pulling out of savings.
- Use a credit card (if you have the discipline). Cash flow can be one of the bigger problems to following a budget – paying the mortgage takes a big chunk of a bi-monthly paycheck, but then you start to run out before you get the catch-up paycheck. If you are disciplined and can stay within your budget, use a credit card all month for expenses then just pay it off at the end.
- Rework your budget. Are you overspending in places and fooling yourself that it’s OK? (I’m often guilty of this) Use Suze Orman’s advice to stand in your truth and be honest with yourself about where your money is going and whether you really need to spend it.
What other tips do you have for avoiding panic at the end of the month? Share them in the comments.