How To Split Your Money Out When You Get Paid

With the overall focus of my blog changing slightly, I am going to bringing you more money-focused content. Ever since I got my first job at 15 I’ve been pretty good with my money. I’m going to hold my hands up and say I’m definitely not perfect. I do have a credit card and sometimes pop things on there I maybe shouldn’t. And I do spend more money on clothes than I’d like to. Although I’m trying to curb this as much as I can. Overall though my budgeting and relationship with money is pretty good.

I thought I’d start off by going over how you should split your money when you get paid. This only really works for those who have a full-time job which has a steady income. I am going to do another post for self-employed people and those who freelance as your income will be pretty different. I have tried a lot of different ways to split my money when I get paid and these are the methods I find that work.

Have separate accounts for your regular outgoings

I’ve tried just having one bank account for everything and it doesn’t work. You always have to think when your different bills are coming out and it’s harder to know how much leftover money you have. The first thing you’ll want to do is create a separate bank account for your regular outgoings. This will be anything which has a direct debit set up so your rent/ mortgage, bills, phone, internet etc.

Having your money away from your expendable income is so important and it helps you manage things better. I actually have about 5 different accounts; one for my car savings every month which helps me pay off my insurance. One for bills, one which is a joint account with Luke for our food and various savings ones.

Set up standing orders for the day after payday to your bill account

This one is pretty simple. Work out how much your regular outgoings are and set up a standing order from the account your pay goes into to your bills account. This means if your bills come out at different times of the month you don’t need to think about this. And it means you’ll always know you have enough money to cover them.

This gets you into great habits and means you know what you’re leftover with is expendable and down to you.

Split your money out when you get paid: Plan your month ahead

Every single month I note down what I’m doing and what I’m going to need money for. For example any plans I may already have I’ll note down roughly what I’ll need for that, or if I know I want to buy something. By doing this you can work out how much money you really need to keep to survive the month.

By doing this in advance you can allocate money for particular events so you don’t miss out on anything. The worse thing is having to cancel or turn down plans as you don’t have the money. Or feeling that you have to use your overdraft, credit or savings to be able to go ahead with everything.

Open an instant access savings account and a high-interest savings account

It’s so important to save because even if you don’t have a goal in place chances are you’ll want money for something. It might be a holiday, or if your car breaks down and needs repairs. Or you’re looking to save for a mortgage. The ONS (Official National Statistics) reports that 53% of 22-29-year-olds have no money in a savings account. While living might be expensive I’m sure we can all put aside a little money a month if nothing else.

Splitting your savings between two accounts gives you a bit of flexibility when it comes to using them. An instant-access savings account means if one month you need to dip into it you can. There’s no shame in needing a bit of extra money one month. But if you find yourself doing this time and time again then you may need to evaluate your outgoings (a post for another time!)

And having a high-interest savings account means that some of your money will go untouched and you might even earn a little bit of money on it. If you’re saving for a mortgage or something longer term an ISA or bond might be best for you. But it’s worth shopping around for the best rate.

Create standing orders to put half of what you want to save into each type of account

Much like you have standing orders for your bills you’ll want to do this for your savings. How you split your easy access and high-interest savings is up to you think about what you want to achieve. If you want to be strict and have big goals put a higher percentage into a high-interest one. If it’s your first time saving you might want to make more accessible until it becomes part of your monthly normality.

Having two sets of standing orders come out straight after payday may make it feel like you’re left with very little. But knowing that money left over is totally expendable for you is a great feeling.

Enjoy the rest

If you made a monthly plan you’ll probably know where most of the money left over is going. And if you don’t then I’m envious! But this is totally yours. If you want to blow it all on takeaways and food then go for it if that makes you happy. If you can’t stop yourself buying clothes and want to spend your leftovers on ASOS orders go straight ahead. I’ll thank you for paying my wages later!

It might be tough to work out how to manage your money but by following these pointers you should have a better plan and find that saving is possible.

Do you do any of these things after you’re paid?

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