The Day before Payday savings plan

[Virgderon]

I was reading an article about the 52 week savings plan, and they suggested this as an alternative.

Since so many people live paycheck to paycheck, the idea is to look at what you have in your checking account the night before payday , and put that amount into your savings account instead of carrying it over.

Has anyone here tried this? Does it work better for you than the 52 week savings plan?

 

[Marionnette]

I was reading an article about the 52 week savings plan, and they suggested this as an alternative.

Since so many people live paycheck to paycheck, the idea is to look at what you have in your checking account the night before payday , and put that amount into your savings account instead of carrying it over.

Has anyone here tried this? Does it work better for you than the 52 week savings plan?

I've never heard of that plan, but I used to take any leftover "me" money and put it into a jar at the end of each week. That money was specifically earmarked for vacation spending and it made me feel better about splurging when we took a trip. I don't do it any longer. However, I still save my change.

 

[ilovemk76]

I was reading an article about the 52 week savings plan, and they suggested this as an alternative.

Since so many people live paycheck to paycheck, the idea is to look at what you have in your checking account the night before payday , and put that amount into your savings account instead of carrying it over.

Has anyone here tried this? Does it work better for you than the 52 week savings plan?

People who live paycheck to paycheck are out of money the day before the next payday.

The best way to save is to pay yourself first not last.

 

[lauradis]

People who live paycheck to paycheck are out of money the day before the next payday.

The best way to save is to pay yourself first not last.

No, you pay the tax man first
then roof over your head
and then food
and then light
and then transportation to make more money

and then you pay your self with the left overs.

 

[cjbcam]

Does anyone watch Till Debt do us part? On her website she has a really good budget sheet. Any extras we have left going into the savings that's already in the budget.

 

[Jeff_G]

Also getting on a written budget for the month and sticking to it is probably the best thing you can do.

Here is a good video on the subject:
https://screen.yahoo.com/dont-buy-stuff-000000884.html

 

[Virgderon]

The 401k is being funded, and I have a Christmas Club. I already put $25 a paycheck into a online savings account and $25 a paycheck into the Disney Vacation savings account. I think this might work really well on some paydays and not so well on others, but I could always try it and see how it goes.

My thought is instead of putting it into savings I will attack the last couple of small credit card balances and maybe pay them off faster.

 

[esmee1sttip]

The 401k is being funded, and I have a Christmas Club. I already put $25 a paycheck into a online savings account and $25 a paycheck into the Disney Vacation savings account. I think this might work really well on some paydays and not so well on others, but I could always try it and see how it goes.

My thought is instead of putting it into savings I will attack the last couple of small credit card balances and maybe pay them off faster.

That sounds like a great plan. It also sounds like you are not new to managing your money and not having your money manage you . Hope that credit card debt goes down quickly for you!

 

[Sagginit]

Well I don't drain my bank account, but I have a set amount I don't go below. I put set amounts into savings, but if I notice I am well over my set amount, I move that into savings too.

Not to sound rude, but after years on these boards I think if you need some sort of mathematical trick or pyramid scheme to get yourself to save, I am not sure how well you will stick to it over time (or save over your life which is what matters). It's like dieting just to fit into a dress for an event. Once the event is over, you go back to the cake and cookies in no time....

 

[Virgderon]

Well I don't drain my bank account, but I have a set amount I don't go below. I put set amounts into savings, but if I notice I am well over my set amount, I move that into savings too.

Not to sound rude, but after years on these boards I think if you need some sort of mathematical trick or pyramid scheme to get yourself to save, I am not sure how well you will stick to it over time (or save over your life which is what matters). It's like dieting just to fit into a dress for an event. Once the event is over, you go back to the cake and cookies in no time....

You don't sound rude. I think these ideas put fun into saving, and feel more like a challenge. I like to read about them. My 401k is my "serious" savings, I have an emergency fund, and my other little savings accounts are mostly to fund wishes or vacations. Whatever works!

 

[Marionnette]

You don't sound rude. I think these ideas put fun into saving, and feel more like a challenge. I like to read about them. My 401k is my "serious" savings, I have an emergency fund, and my other little savings accounts are mostly to fund wishes or vacations. Whatever works!

Agreed!

I'm not the kind of person who play games with my money, so I'm not drawn to these challenges. I think they're fine for some people who are looking to put aside some fun money, but they're a poor substitute for a serious savings plan.

IMO, people who are living paycheck to paycheck and have no regular savings plan are not going to be successful with this type of saving plan, either. The lack of discipline in their regular spending habits will also lead them to raid whatever they saved one week in order to buy gas for the car the next week.

 

[cheap traveler]

I think this would really mess up my budget. For one, I don't live paycheck to paycheck, so each of the first 3 paychecks of the month would be getting moved to savings, because $XX was being saved from each one to pay the mortgage (I split my bills up to weekly amounts - bc one check can't pay the mortgage).

So week 1, I put the entire check aside from groceries into savings. Week 2, I pay for groceries and the phone bill, everything else into savings. Week 3, food and internet bill. Week 4, mortgage due and there is no money in the account, so I have no house and no childcare. No good.

I put aside a certain amount every week, works out to actually be 40% of my check, and I'm quite happy with that. Same reason I won't do the 52 week challenge - saving $1 isn't an improvement for me.

 

[aprilchem]

I was reading an article about the 52 week savings plan, and they suggested this as an alternative. Since so many people live paycheck to paycheck, the idea is to look at what you have in your checking account the night before payday , and put that amount into your savings account instead of carrying it over. Has anyone here tried this? Does it work better for you than the 52 week savings plan?

I actually do this, but in conjunction with a written, zero-based budget. I get paid tomorrow, for example, and tonight I'll transfer the $600 I didn't spend from last month's paycheck into savings. I was able to save on the grocery budget and one bill was less than I'd expected. I've already done my budget for the next month, so any extra money in my account would mess me up!

I don't think this would work as one's only method of saving, though. A written budget (so you see where your money is going) is the way to go, IMO.

 

[willowsnn3]

People who live paycheck to paycheck are out of money the day before the next payday.

The best way to save is to pay yourself first not last.

And unless your paychecks are pretty big, it usually takes more than one just for the mortgage.

 

[Minnesota!]

That is what we do. I budget every last penny, but sometimes, I don't spend them all (like, I budget $75 a week at the grocery store...sometimes groceries might only cost $50...). So, day OF payday, I take whatever was left and move it to savings. It's not usually much, but even $30 4x a month adds up to $1560 a year....

ETA - this is just "extra" savings. We put a hefty % of our paychecks into savings. I keep only the money I need for gas, groceries, and odds and ends in checking. Every other penny is delegated to a certain savings (even our date night money goes into a separate account). So, like I said, we only save $$ if I am below gas and groceries budget.

 

[angierae]

I do a spreadsheet that's a lot like the "envelope" method. A set amount goes into savings every paycheck. Anything left at the end of a payday in a specific category gets rolled over into the same category for the next pay period. If I start a pay period with the full budget amount already in there, the money thta would have went in goes into savings.

So if I budget $60 for gas, and for three pay periods in a row, I only spend $40, at the start of the fourth pay period there's already $60 in that category, so the $60 that WOULD have went in there goes into savings and I just spend the rolled-over amount.

(I hope that makes sense.)

 

[Minnesota!]

People who live paycheck to paycheck are out of money the day before the next payday.

The best way to save is to pay yourself first not last.

We live paycheck to paycheck in the sense that every penny is allocated on payday. If I know there is something I need to spend money on - school clothes, field trips, etc., then that gets factored into the budget for that week. We never leave extra money around in checking...less temptation to spend it. There has to be some planning involved to spend money...because I would have to log on to my bank, and actually transfer the money to spend it. And, that gives me enough time to pause and see if it is worth it

It is what works for us - and funds our travel addiction, ha!

I do a spreadsheet that's a lot like the "envelope" method. A set amount goes into savings every paycheck. Anything left at the end of a payday in a specific category gets rolled over into the same category for the next pay period. If I start a pay period with the full budget amount already in there, the money thta would have went in goes into savings.

So if I budget $60 for gas, and for three pay periods in a row, I only spend $40, at the start of the fourth pay period there's already $60 in that category, so the $60 that WOULD have went in there goes into savings and I just spend the rolled-over amount.

(I hope that makes sense.)

I keep a similar spreadsheet. It is what finally worked for me after a few years of struggling with finances in the early years of our marriage.

 

[Marionnette]

We live paycheck to paycheck in the sense that every penny is allocated on payday. If I know there is something I need to spend money on - school clothes, field trips, etc., then that gets factored into the budget for that week. We never leave extra money around in checking...less temptation to spend it. There has to be some planning involved to spend money...because I would have to log on to my bank, and actually transfer the money to spend it. And, that gives me enough time to pause and see if it is worth it

It is what works for us - and funds our travel addiction, ha!

Living paycheck to paycheck is not the same as having a zero-balance budget.

People who live paycheck to paycheck have nothing in savings. They spend every dime that they make and sometimes more than that. They panic when back-to-school shopping starts or if they need new tires for the car. They go on a spending spree when the paycheck hits their bank account (if they have one) and then worry about putting gas in the car a week later because they spent their last $5 on milk and bread for the kids. There's no safety net in place for emergencies and they are constantly borrowing from friends and family when a crisis arises.

 

[ilovemk76]

No, you pay the tax man first
then roof over your head
and then food
and then light
and then transportation to make more money

and then you pay your self with the left overs.

By putting money in our 401K we are the first one being paid.

After paying the tax man, we again pay our self, per our budget.

We could Los that roof or have empty bellies is we did not haveoney for the inevitable problem.

 

[AlohaNow]

I get where Minnesota is coming from……..one could say that everyone lives paycheck to paycheck because the money is simply not in your account until it is! We too joke that we live paycheck to paycheck with the zero-based budget but realize that is bad form. We are certainly not deciding between heat, food, or medicine in our budgeting decisions. If you have an entertainment, vacation, or savings category in your regular budget, then you are not paycheck to paycheck.

Sometimes I look around my house and wonder why I stress about money so much. We have everything we need and then some. Just the fact that we own a house; we snapped our fingers and got a mortgage. I mean, that came from years of being responsible with money, thereby protecting our credit. Sorry, a little off topic, but you know what I mean?

And I agree with the poster above that many people’s mortgage is more than one paycheck in its entirety, so that plan would not work for everyone. But whatever method works for an individual in getting them to start and stick to a savings plan - I’m all for that!