The Half Payment Budget Method Explained

The post The Half Payment Budget Method Explained appeared first on Penny Pinchin' Mom.

The half payment budget method might be what you need.  If traditional budgets do not work, you really might want to consider this method instead.

 

half payment budget method

 

If you do any research, you will find many ways to budget.  However, many times, the options you find do not work for you.  That is why it is important to find the right budget for your needs.  A new one you may not have tried is the the half-payment budget method.

This system helps many people stop living paycheck to paycheck.  Simply explained, it is where you take your regular, recurring payments and divide them in half.  Each payday, you set aside the necessary money out of each check so that you have the full payment available when it is due.  The half payment is not paid at that time, but rather you hang onto it and pay it on the due date.

If you are just learning about budgeting, you will want to check out our page — How to Budget. There, you will learn everything you want to know about budgets and budgeting.

HOW TO USE THE HALF-PAYMENT BUDGET METHOD

In order to explain this in a simple manner, here is how this system might look for you:

Monthly income: $2,500 (paid $1,250 every other week)

Recurring monthly payments (other than utilities):

Mortgage/Rent: $900
Vehicle Payments: $450
Auto insurance: $100

When you apply the half-payment method, your weekly budget would look something like this:

Paycheck #1 – $1,250

Set aside $450 for rent/mortgage
Set aside $225 for vehicle payments
Set aside $50 for insurance

Leaves $525 out of your paycheck for other expenses

Paycheck #2 – $1,250

Take $450 from previous paycheck and add $450 and pay $900
Take $225 from previous paycheck and add $225 and make full $450 payment
Take $50 from previous paycheck and add $50 to make $100 payment

Leaves $525 out of your paycheck for other expenses from each check

 

Now, let’s compare this to the method that many use – to just pay when the bill is due:

Paycheck #1 – $1,250  

Rent – $900

Leaves $350 for all expenses

Paycheck #2 – $1,250

Vehicle payments – $450
Insurance – $100

Leaves $700 for additional expenses

If you do the math, you will notice that you still have the same to spend over the course of a month, however, you will see a difference in the amount from each paycheck.  You might show that you have more money left after your 2nd paycheck of the month, but will you really save that?  Most people do not. If they have extra month to spend, they just spend it.

 

How to Start

I would not recommend that you jump in and change all of your bills so that they are paid using this method.  That may be too much and you might quit before you even really get started!  Instead, select one bill, such as a car payment, and try using the half payment method for a few months.  Once you see it works, you can transition other bills into this same payment method.

 

Why it Works

So, why would you use the half payment method?  For many it works better because you have around the same income to spend out of every check, rather than cutting your spending in half like you see in the second example.  For many, there is always that paycheck that makes spending tough.  When you have to pay a few larger bills all out of one check, it often leaves little to no money left for other purchases.

By changing to the half method, you are still paying your bills, but you are just earmarking money to pay a bill due later in the month.  You still have the same income.  You still pay your bills on time. However, you have more disposable income every two weeks by doing it in this way.

What is great about this method is that it works no matter how you are paid.  If you are paid monthly or weekly you might try using a quarter payment method every week (breaking out your check to leave spending weekly).

 

If you want to learn more about understanding your money attitude, change your spending habits and get out of debt once and for all, check out the Financial Rebook eBook.

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How To Convince Your Spouse You Need A Budget

The post How To Convince Your Spouse You Need A Budget appeared first on Penny Pinchin' Mom.

Being able to convince your spouse you need a budget can be challenging.  You know it is important that you have a budget, but how to you get your partner on board?

Learn tips on how to convince your spouse you need a budget -- and learn how to create a budget

You might be the saver in your relationship and your partner is a spender.  Your situation could be that your spouse just does not care or have enough understanding of the topic of money.

Whatever the case, the place to start to resolve any differences in money begins with one word – BUDGET.  This is not optional.  It is required if you plan on gaining control of your finances.

Where do you start and what do you do?  Let me start by saying the things you should not do when it comes to money and your partner:

  • Do not nag or annoy your partner.
  • Never manipulate or act like a parent.
  • Don’t try to talk about it when he or she is doing something else.
  • Do not say that they have to do this “or else” (ultimatums rarely work).

Now that you know what you should not do, let’s get into the nitty gritty of what you can so you and your spouse or partner are truly on the same page.

Read More:

  • How to Talk To Your Spouse About Getting Out of  Debt
  • How to Set Financial Goals
  • How to Overcome a Money Saving Obsession

TALKING TO YOUR SPOUSE ABOUT YOUR BUDGET

Set a Budget Date

This may sound strange, but it works.  When you set aside time for a financial meeting, you both can work together without distractions.

Make sure that the kids are entertained or even away at a friend’s or grandma’s house. It may mean setting up time after they are in bed.  Turn off the television.  Put the phone on silent (or even in the other room).

Allow yourself no more than one hour for your meeting.  If you go longer than that, you both my lose focus.  If you find that one hour is not enough time, set up another meeting.

Then, once your budget is working, continue to have regular meetings with your spouse or partner to go over your finances.  As your budget begins to take hold, these sessions will be shorter and shorter (and also much less stressful).

 

Play the Budget Game

Many times, people do not want a budget because they really don’t know what their finances look like.  A good way to see if you both agree is to do your own “dummy budget.”

To do this, you both will get a sheet of paper.  Set the timer for 10 minutes.  During that time, write down all of the bills you pay each month – as well as the mount.  Make sure to also include the total income you bring in as a family.

Once the timer is up, go over your lists together.  You may find that you both are well aware of your finances, which makes it easier to move into the next step.

However, you might also find that one of you has no idea what your financial situation looks like.  Allow time to go over both lists and figure out why there is such a disconnect between what you really pay vs. what you think you pay.

 

Have a heart to heart talk

During your meeting, make sure you talk about more than just the amount of bills and income.  You need to really understand one another and how you feel about money.  These topics could include:

  • If you love to save or spend and why
  • Your financial fears
  • What money means to you
  • What your goals are with your finances

Once you better understand money for your partner, the easier it will be to work together towards achieving financial goals.

 

Set goals as a couple

As I shared above, you need to talk about your goals as individuals.  Once you learn that about one another, see what you can do to create set goals as a couple.

Your goals could include to pay for college for the kids, buy a new car in 15 months or even take that dream vacation with the kids.  Your individual goals then morph themselves into family or couple goals.

Now, you can create a plan to actually move forward together to reaching your financial goals.

 

Use the right tools

Once you have completed the above, you are now ready to get started creating a budget — together.

There are many types of budgets you can use.  You might find you are old school and want to use a paper and pencil.  However, a spreadsheet may work better.  Or, you and your spouse might be the couple who loves to use an app.  The thing is that none is better than the other.  One is not right nor wrong.

Find out the type of budget that works best for you as a couple.  Then, sit down to tackle the creation of your budget. Using something such as our free budget calculator can help you work together to make your budget work.

 

Being on the same page financially lays the ground work to helping improve your relationship.  Your budget is the first step into turing this dream into a reality.

hand on calculator

The post How To Convince Your Spouse You Need A Budget appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

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