How to Make the Most of Your Paycheck: 4 Considerations

Managing your paycheck is important when it comes to reaching your financial goals and planning out your future. Understanding how to allocate your paychecks will help you gain financial consistency, develop healthy financial habits, adjust to changes, and even improve your decision making. 

Here are 4 considerations for making the most of your paycheck.

1. Verify

The importance of verifying is knowing your starting point. 

The first thing you want to do when you get paid is verify your check. Look at the total amount you've been paid and make sure the total make sense.

This shouldn't take long as you get familiar with your check amounts. Be aware of things like payroll deductions for gym memberships or company purchases. These can add up or be forgotten about. Also, make sure you have been paid any bonuses or overtime hours. This helps keep a reminder for any extra income or deductions you can expect.

Next, verify pertinent expenses that you need to pay. If there are any unpaid balances or extra money that you have left over in any accounts, you want to be aware. This will help you prioritize how you want to allocate your paycheck. For me, I like to review all of my accounts (checking, savings, and debt) to make sure I know what balances I'm starting with. This will let me know if there is any other dollar amounts I can add and use to my current income amount. 

You now have a clear understanding of your starting point. 

2. Calculate

You want to calculate your expenses to make sure you are paying your bills on time and prioritizing your goals. 

List out all the expenses you need to pay for the period. Subtract each expense you plan to pay from your total starting number.

Calculating before actually making payments will help you be clear on whether you have enough to pay all of your expenses. This will also prevent mixing up due dates. 

Calculating and planning out what you will pay gives you a chance to make changes and move numbers around so you can spend your money effectively. 

High-priority expenses like rent, utilities, groceries, emergency fund, debt payments, and childcare should be considered first, especially if your starting amount will not cover all of your expenses. Decide what your priorities are for your budget and lifestyle so you know in advance what you want to commit to paying.  

Do not forget to calculate money for spending, saving and investing. Being consistent with an emergency fund for example may be a priority for you if you want to decrease your risk for debt. Saving for a house, trip, or personal project will help keep you motivated along your journey. 

Prioritizing and calculating your savings and expenses will decrease financial stress and help you gain better money management habits.

3. Pay

Now that you have calculated how much you need to contribute and to whom, it's time to take action.

Planning your check before you pay it helps build control over your finances and sets your priorities. Now that you know what you need to pay you can make your payments knowing what your accounts will look like once everything is paid out.

This is really important if adjustments are being made for a recent changes to your budget (traveling, holidays, etc.). If there is a season or event that is happening your spending can change based on financial responsibilities or expectations. 

Having a clear time to pay your financial responsibilities will help you not get behind on payments and ensure everything is paid in full. 

After paying out your expenses and contributing to your savings and investments according to what you planned out you're ready to plan ahead. 

4. Plan

Planning for your next check is taking a step forward in owning your financial future. 

Reflect on your goals, your why, and your current situation. Start making small decisions on how you want to manage your next check. Small decisions like setting up a budget, writing out your goals, or making a grocery list to save on eating out will help you move forward in your journey. 

For example, the summer season is approaching and you know you like to go to events, hang out with friends, or travel. Now will be a good time to make a small step to save for your summer plans. Eating out less, not making large purchases, or setting aside savings for your summer fun can be a great start since you know your spending will increase soon. 

Planning ahead allows you to be better prepared for any adjustments or changes that may need to happen for your next check or financial season. 

In Conclusion

By Verifying, Calculating, Paying, and Planning your paycheck you can gain control over your finances. Staying consistent with these steps will reduce financial stress, help adjust to life changes, and keep you moving towards your goals. 

Want to develop financial consistency? Check out 6 Ways To Be Financially Consistent and Promote Change