Before I delve into when your payday is, let us first discuss trying to spread your disposable income over a full month.
If that statement on its own makes you nervous or confused, we have got bigger problems than I had anticipated. What I have witnessed is that payday comes and everyone is in the malls. This is then closely followed by the end of the month Salticrax. Living in overdraft at the end of the month while counting down the days to the next payday does not seem rational, does it?
Soon after payday most people generally have their big debit orders being deducted (I say ‘most’, but on a personal note, I am not a fan of debit orders).
This then leaves us with disposable income to fund our running expenses for the month. If you are shopping for groceries ad hoc, or enjoy eating out occasionally, or whatever else it is that you pay for with this remaining disposable income, try and spread this over the course of the month.
If that sounds like an outrageous suggestion to you – you are living beyond your means! If you need to go as far as dividing the amount by four and limiting yourself to that spend each week, so be it.
It’s small things like these that help us budget and live within our means.
So what about the actual date you are paid, that is the 25th vs the 30th? Well, there are two considerations here: which date you are paid and how you view a month.
Personally, I get paid on the 25th but view a month from the 1st to the 30th. What does that mean? Whilst I receive my salary on the 25th, I try not spend it till the next calendar month, as I am still living off the previous month’s salary for this current month. What is my risk? That I do not invest timeously – that is, I am allowing cash to sit in my bank account for five days before I transfer my savings. But – I have a safety net. A small, but valuable one.
Those of us who run our own business, work part-time, or are on short-term contracts are at even more of a risk. If you can anticipate times when you will be out of pocket, you need to make allowances for those when you are generating an income. You need to think further than what you need for a month, but rather what you need for a full year.
That way you will be better informed to smooth your earnings over the anticipated outflow. Whichever way it applies to you, budget for it – and live within that budget.
ADVICE
When is your payday? The 25th? The 30th? Depending on when you can secure work? And how long can you stretch that salary to fund your day-to-day living expenses? Consider these questions mindfully. Whatever your responses, ensure that you live within your means for the month. Furthermore, try and plan for a bit of a safety net for those couple of days at the end of the month before the next pay day. It’s those small steps of daily discipline and self-control that bring about financial freedom. Even if it’s freedom on a small scale.
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Please note that the author of this article is not a certified financial advisor in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. Accountancy SA and the author cannot be held liable for any loss (including indirect and consequential loss) arising from your reliance on the opinions given in this article. Should you nevertheless elect to rely on this article, you do so at your own risk and agree to indemnify Accountancy SA and the author from any loss or damage that you may suffer as a result.
Author: Gizelle Willows CA(SA) MCom Finance is Senior Lecturer in Financial Reporting at the University of Cape Town
