*Disclaimer: This blog post may contain an ad, affiliate codes, or external links. This is not investment advice, only a different way to budget.
Who does it fit?
Living paycheck to paycheck has a negative connotation and many other finance bloggers write about how it should be the ultimate goal to not live this way. However, this is dependent on your outlook. If it negatively impacts you then you should strive to get away from it but if you cannot get around it for now then you need to switch into a postive. As of right now there are many budgeting systems: Time-based, cash-only, only necessities, cash flow, zero-based budgets, etc.
Within the finance community the Zero-based budget is a new buzzword.
One thing I have realized is that a budget is as unique as the individual making it. They all fit different types of people, it is not a one-size fits all.
So, I will tell you what works for me and has worked for me since I was a teenager earning minumum wage with irregular paychecks.
As most of you know, I am part of the debt-free and FI/RE communities on Instagram where the ‘Zero-based-budgeting system is mostly utilized but I have been able to manage my on a paycheck-to-paycheck basis and still save at least 30% of my monthly salary. For those of us who have a tiny shovel or have a irregular paycheck, it is manageable.
I have earned around minimum wage for the majority of my adult life and my pay was irregular but I worked around 25-30 hours a week. It was not until I was 25 did I begin earning above $12.00, when I entered Banking and even then I was only part-time. As I moved up the ladder, I kept the same budgeting system and it even works when dealing with two currencies.
So, what is this budget?
I usually got paid on a biweekly basis. So, for this to work you need to have some way to save. Open a bank account or an investment account like Acorns [affiliate code], or any place that you can safely stash it away.
I would pay myself first, then my bills, and have a spending amount with a little buffer. At the end of the payperiod, I would zero out my account. So, if $20.00 was left it was moved to savings, if $0.57 was left it was moved to savings.
Every paycheck was a clean slate, a chance to start over.
I was literally saving pennies for a while but over time I was able to save more. Since, it motivated me to get better paying positions.
Personally, I preferred to use my pennies to invest. I used Acorns for years and it allowed me to buy shares of stocks at $5.00 a month. So, I would save a mimimum of $5.00 a month and treated it as a bill to force myself.
If you have irregular paychecks and feel that you cannot save, try this method and see if it works. I know everyones financial situation is different but trying is something that does not hurt but it helps in the long run.