Whether you make $100,000 or $1,000,000 a year, your financial habits will follow you. Many clients think their money problems will disappear when earnings increase, but it doesn’t matter how or when you get paid; it matters how you think about and manage your money.
Today’s episode continues the podcast series about paychecks. I address common mistakes people who get paid once monthly make and share strategies to manage these paychecks confidently. From detailed budgeting to creating a second payday, I share healthy financial habits to help you break the paycheck-to-paycheck cycle.
Stay tuned for insights on these topics:
- [01:45] It doesn’t matter how you get paid: paycheck series recap
- [07:16] Getting paid once a month
- [09:52] Creating a second payday
Tune into this episode of Money Files to learn how to manage your finances in a once monthly paycheck cycle.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
IF YOU LOVED THIS CONVERSATION ON CREATING A SECOND PAYDAY: HOW TO MANAGE MONEY IN A ONCE MONTHLY PAYCHECK CYCLE, CHECK OUT MY EPISODE ON HOW TO BUDGET FOR CLARITY & CONFIDENCE!
Transcript for “Creating a Second Payday: How to Manage Money in a Once Monthly Paycheck Cycle”
Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello and welcome back to another episode of Money Files. So I’ve been doing a paycheck series and really wanting to dive in to when you’re paid and how to manage and think about your money. I talk to clients all the time where they’re like, Keina, I only get paid once a month. Keina, I get paid every week. Keina, I get paid twice every month. I get paid every other Friday, whatever that may be. And people use how they’re paid to tell me how they experience their money from one week to the next, how they experience their money from one month to the next. And honestly, I don’t think it matters how you get paid, it matters how you think about managing your income. I have worked with seven-figure entrepreneurs and business owners and I am telling you guys that whatever habits you build in thinking about your money, whether you’re making $10,000 a year or you’re making a million dollars a year, your habits will follow you.
I think a lot of people think like, well when I made less money I was really good at managing it. And that’s not necessarily true, although I know that’s your thought. You probably didn’t allow yourself to do certain things and you were in a place of scarcity because you didn’t make that much money. And so now that you make a lot of money, you spend it however you want because you have the belief that now that you make more money, you shouldn’t have to think about managing your money. So because you haven’t actually built a solid foundation for how you want to think about your money and how you want to be intentional with your finances, you just spend however you desire to spend. And as a financial coach, I am always drilling down for people and really, really helping them think about how they want to spend money month to month.
I actually had a client that I talked to last week and I was talking to her about she’s a pet owner. And I was like, okay, well tell me about your pet, like how often do you go to the vet? Do you feed your pet fresh food? Do they eat dry food? What happens to your pet when you go out of town? And we’re just having this conversation. She’s like, oh my goodness, Keina. Like, I don’t think about those things. I for sure have those expenses. I have the vet expenses. I need to think about flea and tick and oh this is what happens for food. And when I do go out of town, I do pay for someone to board my animal. And we’re talking about toys, like they’re simple things, but they’re the things that you don’t see.
And I call them simple because when you go out and make these purchases day to day, there are things that you want in order to enjoy your life. Like if you have a pet, that pet is a part of your family and you are going to do what you want to do for that pet. But when you’re not thinking about your pet, when you actually go to budget and you’re only thinking about your electricity bill and your rent or your mortgage, those are the things that cause you to feel like you don’t have enough money. And it’s no singular item, but it’s really the whole big picture. And it’s why I love being able to give my clients this holistic approach to thinking about their finances because we’re not just thinking about the bills. The bills are great, they’re always going to be there but I want to know, how do you want to spend money in between payday?
I want to know about the people that live in your household. I want to know about the pets that live in your household. I want to know about your hopes and dreams. And I want to put those into a plan that help you feel like, okay, I actually feel like I make the money that I make and I have something to show for the money that I make. So in this paycheck series, helping you really think about, it’s not how you get paid. You could get paid once a year for all I care and I’d be like, okay, yeah, you get paid once a year. We can make it work. And the way that we make it work is we develop systems around your once a year paycheck. We don’t just take the paycheck and pay what’s in front of us and then go and spend the rest, which that’s what you guys are probably laughing right now because that feels like an extreme but that’s what happens when people get paid, is that they pay attention to what’s in front of them and they don’t necessarily think about the increments of time and like, okay, what’s happening 30 days from now? What’s happening 90 days from now? What’s happening six months from now? What’s happening a year from now?
And so we have to learn how to plan in these different financial cycles in order to feel like we have a surplus of money. So that’s what I do inside my five month coaching partnership. So if you have gotten to this far in the episode and you’re like, oh, Keina, I have an animal, help me think about my animal or you want to feel like you have a surplus of money, I would invite you to take the next steps and apply to work with me. We’ll have an hour consult where you will feel like we’re best friends and you’re going to know exactly what to do with your money by the time that we finish our consult call. I’m going to tell you exactly what the problem is and how I can help you. And five months from now, you are going to be a completely different person in terms of how you think about money.
But even in the next month from now on that next payday, you are going to be thinking about your finances differently and you’re going to see your bank account differently. You’re going to have peace of mind about like, wow, Keina, I didn’t even have to check my bank account balance in between the last time that I got paid and this time that I got paid. Like when I look at my bank account, there’s always money in my bank account. And so that’s a filling that I want you to have. So if that’s you, go to my website Wealthovernow.com/appointment and you can apply. If you just go to the website, you’ll see like book a call or you can go to the show notes.
So I would love to work with you. So let’s officially dive into today’s episode. Like I said, I’ve been in a paycheck series and I’ve been talking about just habits that you should have around your pay stub. I have been talking through different ways in which people are paid. So I talked to the 1099 contractor. I’ve spoken to those of you who have been paid biweekly or you are paid twice a month. And differentiating in between, like how do I manage my paycheck if I’m paid biweekly versus twice monthly? And today I want to talk to those of you who are only paid once a month. I have clients that are only paid once a month. If you listen to my client Nicole’s episode, we talk about her being paid once a month and just the shifts that she was able to experience in working with me.
But when you’re paid once a month, the challenge that I see a lot of clients have is that you get your paycheck, let’s say you get paid on, the 30th, 31st towards the end of the month. And what happens is you go and you pay your rent, you pay your car note, you pay your utilities, you pay everything that you see right there in front of you and then you give yourself permission to use the rest of the money because technically all of your bills are paid and that is true. But usually what happens is because that money all comes in at once, and if you’ve just gotten off of day 28 in terms of your cycle of spending money, you are now in a place where you’re like, oh my goodness, my bank account is full because I’ve been running on my last couple of dollars.
And so what happens is you start to overspend on discretionary items, like one-offs in your budget, whether it’s getting your car fixed or you’re going out to eat or maybe you’re buying the concert tickets. And so if you’re just spending from your bank account, what’s happening is you feel like your bank account balance is going down. It does not feel like it’s increasing. And so now it’s going down. And by probably week two, if even week two of the month, you’re like, gosh, I don’t have any money and I don’t get paid again until the end of this month. And so you are feeling like you don’t have money, but it’s not true you do have money.
So I want to talk through the solution and how you can actually put yourself in a place where you don’t have to feel like you don’t have any money. The only thing that a payday is guys is a dopamine hit. It’s a dopamine hit for you to get cash in your bank, especially if you are worried about when your payday is. That’s how you know that your payday is a dopamine hit for you. I don’t want your payday to be a dopamine hit. Your payday should just be another day on the calendar where you’re like, oh yeah, I got money, but I already know what to do with the money. So like, I don’t have any money because of the fact that the way that you manage your money is so organized. So one solution that I have for you, if you are paid on a monthly basis, you can create your own second payday and by creating your own second payday, there are a couple of things that you would need to know.
One, you would need to know all of your bills, like your tangible bills for the month. And so I want you to know your rent, I want you to know your utilities. I want you to know how much you spend on gas. I want you to know how much you spend for Netflix. I want you to know about your Apple payment. I want you to know all of your bills, both the bills that are due for that month, but I also want you to be thinking about like, what are some of those hidden bills? Maybe you get your hair done quarterly or maybe you have a housekeeper that comes every other month. They don’t come once a month, but they come every other month. And so when I call it a hidden bill, I’m saying and really bringing up the fact that it’s not something that you pay every single month, so you kind of forget about it until it creeps up again.
So even just kind of thinking about what’s happened for you the first five months of the year that felt like, oh dang, that just creeped up on me. Those are the things that I want you to consider and put into your plan. So first I want you to know what your bills are and then I want you to know what do you need to save for? So I want you to have a plan for this is how much money I want to save for my emergency fund. I want you to know how much you need to save for your yard work. How much do you need to save for your home maintenance? How much do you want to save for travel? How much do you want to save for gifts? I want you to get clear on what that number is and then the money that you have left over, you can definitely think of it as your spending money.
So in this example, what I would tell you to do, let’s say that you had your monthly paycheck is $6,000 and you’ve gone through this exercise and what I want you to do is you have your bills. So if you wanted to, you can take one checking account, which I’m mixing two solutions in here. So you’re going to listen up, you can have one account that is just for your bills. You could open up another checking account or use the current one that you have. And you know that $3,000 needs to be for your monthly bills. And some of those are going to be bills that we can see right now. Some of those are going to be bills that we see in the future, like your hair appointment or the housekeeper that comes every other month. So in that bills account, we’re going to take our $6,000 paycheck and we’re going to put $3,000 into that bills account.
Then say that we have thought about, okay, our emergency fund, we want to be able to save $750 a month. Like that’s our goal because if we save $750,000 a month, that’s going to get us to over $8,000 for this year for our emergency fund. And then let’s say you want to save another $1,250 for maintenance, yard work, travel, gifts, clothes, whatever that is, you’re like, I’m going to save for the anniversary sale at Nordstrom. I want you to then take your emergency fund money and take those other savings buckets and I want you to transfer them into a savings account. So you could have a savings account for your emergency fund, you can have a savings account for those smaller short-term saving goals, like I said, maintenance, yard work, travel, gifts. So what you’re hearing me say right now is $3,000 is for bills and $2,000 is for savings.
If your paycheck is $6,000, what I can see then is that you have a thousand dollars left to spend drama free. You can spend a thousand dollars with knowing none of this touches my bills, none of this is going to touch my savings goals that I have a thousand dollars that I get to spend drama free. And so you can open up, I actually have a lot of clients that they open up another checking account and it’s their drama free spending account. And so for you, if you’re someone who paid monthly, it’s like, okay, that thousand dollars I know I have that a thousand dollars that I get to spend for this month. If you were to break it down, it’s like I get $250 a week. I can think about what am I going to spend $250 a week on? If I don’t spend the whole $250 it rolls to the next week.
But the extra layer in there that I was mentioning to you as the solution is to create your own second payday is you could split that drama free money, you could split it in half, you might decide that you want to take $500 of that and maybe it stays in your savings account. And then, on the 15th of the month, you transfer another $500 to your drama free spending account. The reason that I suggest that is because it’s going to give you that dopamine hit of a payday because you right now are like managing your money from one lump sum when you look at your bank account. But what’s not happening is you’re not looking at that one lump sum needs to help you for 30 days or 31 days.
And so by breaking up how much you spend on bills, breaking up how much you want to save and breaking up how much you want to spend, it’s going to provide you a level of clarity. So you’re not going to be bothered by the fact that you only get paid once a month because you are putting yourself in a place where you get to be really intentional about how much money you want to spend and how much money you need for bills and how much money you want to save. And that’s what I want you to be is I want you to be in a place of control. I don’t want you to just allow things to happen to you or just have a thought that like it’s too hard to manage your money because you only get paid once a month. It’s not too hard.
We want to get you to a place where you think about managing your money differently. That’s the goal. And when you are in that place and you find the beauty of that place, then everything is going to shift for you because you’re not going to just be looking at your bank account balance and making decisions based on your bank account balance. So that’s why I say that it doesn’t matter what day you get paid, it doesn’t matter how often you get paid, it matters how you’re thinking about your money. And when you are really thinking about spending your money in a way that feels good to you, you’re going to find that budgeting actually feels really, really therapeutic.
Maybe you were listening to me in this podcast episode and you’re like, oh my gosh, Keina, that sounds like so much work. In the beginning it’s like you move a couple of things. It’s a different way of thinking, but it’s actually not a lot of work. You know what is a lot of work trying to move money around when you feel like you don’t have any money until your next payday? That’s what’s a lot of work. So that’s what you’re doing each month instead of creating a system that’s going to help you manage your money month to month.
So if you were someone who’s paid monthly, biweekly, whatever and you’ve listened to this podcast episode and you’re like, oh my goodness, Keina, I would really want to be able to have a surplus of money and I want to be able to spend drama free.
I want you to tell me exactly how to be thinking about my finances. I want to invite you to apply to work with me in my five month coaching partnership. You can go to the show notes, you’ll see the link to apply or you can go to my website@wealthovernow.com and up there you’ll see that you have a space to book a call. So I look forward to being able to talk to you soon. And until next week, have a great week.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
