Getting a month ahead can do wonders for your financial situation. I am working on getting a month ahead by building a sufficient buffer in our checking account and this is usually the easiest way to get started. This isn’t common in the world I’m from and I first learned about getting a month ahead of your finances from other personal finance bloggers. These bloggers who have successfully gotten ahead of their expenses seemed to have their ducks in a row so I wanted to follow suit. By doing this, it has prevented me from living paycheck to paycheck. If you’re tired of living from paycheck to paycheck, then look no further – this post is for you.
Why would someone want to get a month ahead?
If you’re living paycheck to paycheck, saving a month’s worth of income will alleviate the burden of waiting for each paycheck to come before determining your budget for the month. You wouldn’t nervously have to wait on your paycheck to hit your account so you could pay your car note. Matter of fact, you would be putting yourself in a position to forget all about payday because each month you would create a budget based on the amount you earned last month.
I like telling stories, so let me introduce you to Terri.
Terri is a single thirty-year-old mother of two. Her monthly take-home income (after taxes, insurance, and retirement) is $2,100 a month and she is paid on the 1st and the 15th. This means twice a month Teri brings home $1,050. She waits on pins and needles for payday to come because she has to pay her $700 rent out of her 15th paycheck so it will be paid on time.
This leaves her with $250 until the first, and this is easily spent on food and utilities. She has no car payment; however, her car is in need of repairs. She wants to set money aside for the expense, but she has to pay childcare.
Here is how her budget works out:
Paycheck 1: $1,050
Phone bill – $50
Gas – $75
Car repairs – $0.00
Student Loan Payment – $300
Misc – $25
Paycheck 2: $1,050
Rent payment: $700
As you can see, Teri only has $25.00 left over each month for miscellaneous expenses. If one of her boys were to get sick and needed to go to the doctor, a $10 co-pay would eat up a portion of what’s left over. If he has to go to the doctor, he’s probably going to need medicine. This would leave her without any money for the remainder of the month.
Teri can’t afford to have a sick child, her car break down, or a higher than usual electricity bill. These types of setbacks are what cause people to go into debt. I’m pretty sure there are plenty of credit card offers filling up her mailbox and a payday or title loan is probably located nearby. This is not a recipe for success.
How can someone get a month ahead on little income?
If you are barely making enough to keep the lights on and food on the table, I understand how it could be tough to think about getting ahead. A paycheck to paycheck life is vicious and don’t think I haven’t walked a mile or two in these shoes before. It’s tough, but simple changes can create big results!
Let’s continue using Terri as an example. There are some positive things that happen for her each month financially, so let’s explore them.
Savings on Gas
Terri knows her car could die at any moment. To make sure she’s prepared, she’s already researched alternative (and affordable) ways to get to work every day. Even though she budgets $75.00 for gas each month, sometimes she doesn’t need that much. She and a co-worker agreed to split carpooling together to extend the life of their vehicles since they live in the same complex.
If one of their cars die, she is prepared to take city transportation and her co-worker has other arrangements. Every other day she takes her co-worker to work and the co-worker returns the favor. The both of them realize that their situation could change at any moment. Therefore, they use this opportunity to pocket the money they are saving on gas.
Terri ends up using an average $50 to $65 of her gas each month so she saves the $10 to $25 savings. For this example, let’s say for the next six months Terri is able to save $120. It might not seem like much, but she has the right mindset.She is saving something no matter how small it is.
Savings on Electricity and Food
Terri also focuses on ways to lower her electricity bill. She unplugs all unused items and adjusts her thermostat for maximum savings. She creates meal plans and prepares her family’s lunches every day. Again, the savings seem small; however, they are huge wins for her.
Last, Terri babysits her brother’s children on the weekends while he works. Her brother pays her $75 per week and sends food for his kids so he won’t add to her expenses. This brings in an additional $300 per month.
After doing this for a few months, she has saved enough for her expected car repairs and is well on her way to creating a buffer that will eventually become a month’s worth of income. This is how Terri plans to stop living paycheck to paycheck. She keeps her expenses low, lives frugally, and brings in whatever extra income to help her get ahead.
Here are some additional things you may want to check out to save more money:
- Stop buying bottled water and get you a plain ole water bottle and fill it up.
- Shop online using Ebates. If you’re new to Ebates, receive a $10 gift card to a retailer of your choice with your first $25 purchase. Sign up here!
- Use Etsy to make passive income.
- Save money on eating out by using Restaurants.com.
- If student loan refinancing is suitable for your situation, check out LendEdu and fill out their quick questionnaire and compare up to 12 different lenders.
- Sign up for Swagbucks and refer everyone! You even get Swagbucks for their Swagbucks (if that makes any sense).
- Cut cable.
- Make sure you’re insured with the best insurance rates. Compare policies with Policy Genius to get the best term-life insurance your money can buy.
- Make sure you keep monthly tabs on your credit report using Credit Sesame. This is a free tool that gives you your credit score and monitors your identity.
- Purchasing a gift card for someone? Purchase it using Cardpool and save up to 35 percent off the gift card amount!
Related Reading: How to Save Money Living Paycheck to Paycheck
Does getting a month ahead replace your emergency fund?
Getting a month ahead only creates a mini emergency fund in your checking or savings account so you won’t continue to live paycheck to paycheck. However, you still need an emergency fund because regardless of being a month ahead, a serious emergency could still cause you to go into debt.
After six months, Terri has managed to gather $1,800 from watching her nieces and she’s saved $120 in gas costs. This gives her a total savings of $1,920. She went ahead and had the necessary repairs made on her car which cost a total of $700. This brings her savings down to $1,220.
She continues to save her babysitting money for another two months ($600), saves on gas ($40), and saves from her reduced electricity bill ($150). This leaves her with $2,010. She’s only $90 away from being one month ahead.
This is great, but what if Terri got hurt at work and was disabled for four weeks? Her disability insurance would only provide her with half of her income, $1050. This means she would have to live on the amount she saved just to meet her expenses for the following month. If she had an emergency fund, she wouldn’t have anything to worry about.
Basically, regardless of being a month ahead, an emergency fund will keep you from going back to living paycheck to paycheck. Terri should continue to save so she will have a healthy emergency fund and still be able to be a month ahead on her expenses. Her buffer is simply a starting point.
Which one should I save up for first? Emergency fund or a buffer?
Honestly, it doesn’t matter. They both are essentially the same thing! Your buffer is simply a mini emergency fund that you keep nearby so you can pay this month’s expenses off of last month’s income. Of course, if you had a true emergency, using the money in your buffer account would be better than going into debt. Therefore, the buffer is an emergency fund of sorts.
I’m encouraging you to go a bit further, though. As mentioned previously, with Terri’s situation, she is still only one paycheck from being right back where she started. This is even with the month’s worth of income she’s managed to save. Being out of work or becoming unemployed would result in her starting from square one.
For more info about emergency funds, you’ll want to check out Emergency Fund: What You Need to Know.
What tools can I use to track my progress?
An easy way to determine if you’re making progress towards getting ahead is to use a budgeting and expense software. If you don’t like using those, pen and paper would be fine too.
Here is how I was able to determine we had a decent sized buffer in our checking account:
- I kept a list of all of our expenses.
- I totaled the amount we brought home each month.
- Once all of our bills were paid for the month, I looked at the remaining balance (before the next paycheck arrived). This was the amount of our buffer (month ahead fund).
Once all of our bills were paid, we were left with $1,300 one month.
This is not an entire month’s worth of expenses for us; however, it let me know we were headed in the right direction of living off of income we earned during the previous month.
To further track my progress I tried EveryDollar during their 15 day trial period to see if it would be easier to keep up with the amount of our buffer. I simply put in our monthly household budget and linked up our household bank account. EveryDollar tracked all the expenses coming from our account and we tracked bills as they were paid.
Ultimately, I decided not to pay for a year’s service on this software, but it did affirm my belief that we were indeed staying on track to getting a month ahead. I still use the free version to keep an electronic version of our budget and it’s pretty easy to use if you want to check it out. It was $99 for one year (the main reason I decided not to keep the full version). There are other free versions such as Mint.
Strategies to help you get a month ahead
A few strategies to help you get a month ahead of your expenses:
- Use Ebay or Craigslist to sell unwanted items.
- Learn how to become a seller on Amazon.
- Take surveys.
- Barter (exchange services or skills you possess for other services or products you may need).
- Pick up a seasonal job, part-time work, or one day gig.
- Sell old broken jewelry for cash.
- If you’re single and have the opportunity to house sit for extended periods of time, ditch your rent!
- Use public transportation.
- Tutor online or in-person.
- Freelance offline or online (graphic design, writing, social media management, virtual assistant etc).
- Save your tax refund.
- Save your work bonuses.
- If you are paid bi-weekly, this means you receive two extra checks per year if you use a bi-weekly budget. Use it wisely.
Need ideas to earn extra cash? Check out the following: How to Earn More Money, 4 Simple Ways to Save More Money, 7 Free Online Survey Sites to Join For Extra Cash, and Make Money From Home Using Amazon FBA.
Wrapping Thangs Up
Getting a month ahead while living paycheck to paycheck is not an easy thing to do, but with determination and the right mindset, it is possible. Now it’s all on you. Figure out a strategy that will help you get a month ahead and put it into action. After you get a month ahead and you’re no longer living paycheck to paycheck, you’ll be happy you made the effort.
Are any of you living off last month’s income? If so, what strategies did you implement to get a month ahead?
Here are a few more ways to jumpstart your month ahead funds! If you’ve never considered signing up for surveys, I think you will find it easy to earn a few extra bucks just for answering questions. There are reputable survey sites, you know! Try some of these:
Harris Poll Online – You will earn points for every survey you take and you even earn for surveys you aren’t qualified for. Once you’ve accumulated enough points, simply redeem! Sign up for Harris Poll Online here!
American Consumer Opinion – This company is another reputable company that allows you to earn for every survey you take. The more surveys you take, the more you earn. Don’t think you have time? Take them while you binge watch Netflix. No excuses. Sign up for American Consumer Opinion here.
Swagbucks – Get your swag on with Swagbucks. I’ve probably been with this site the longest and you can earn swagbucks many different ways. You can earn by taking surveys, watching videos, doing internet searches, and finding swag codes. Redeem your swagbucks for gift cards and thangs. Sign up for Swagbucks here.
Vindale Research – I’ve been sleeping on this company and I’ve got to get with it, but their payouts are AWESOME! Earn up to $100 on some surveys if you’re lucky. $5, $10, $15 wouldn’t hurt either. Of course, once you earn enough you redeem for rewards. Sign up for Vindale Research here.
Opinion Outpost – Opinion Outpost is very straightforward. You take surveys and you earn points. Once you’ve reached a certain amount of points, you can redeem those for cash paid out via PayPal or gift cards from Amazon and other vendors. Sign up for Opinion Outpost here.
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