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How to Budget Between Paydays

By C.G. Handley

Most budgeting advice assumes you have money to spare. If you live from one payday to the next, you need something more practical: a way to make sure the money you receive covers the days you have to get through. The method below takes about twenty minutes and needs nothing more than a pen and paper or a notes app.

Step 1: Count the days, not the months

Calendar months are an awkward way to budget because they do not line up with your pay. Instead, think in pay periods: the stretch from one payday to the next. If you are paid monthly, a pay period might be 28 to 31 days. If you are paid every two weeks, it is 14. Knowing the exact length matters, because it tells you how many days your money has to last. Our payday countdown does this sum for you.

Step 2: List what must be paid

Write down every bill and commitment that leaves your account during the pay period, with the date it leaves. Include rent or mortgage, council tax, energy, water, broadband, phone, insurance, travel passes, childcare, loan repayments and any subscriptions you would struggle to cancel. Check your bank statement for the last two months to catch anything you have forgotten, such as annual fees that hit mid-month.

Step 3: Work out what is left

Subtract the total of your must-pay list from your take-home pay. What remains is the money available for food, transport, household items, social life and everything else. If the figure is negative, the problem is not your spending habits but the size of your commitments. In that case, look at the section on reducing fixed costs below before anything else.

Step 4: Turn it into a daily figure

Divide the leftover money by the number of days in the pay period. If you have £280 left and 28 days to go, your daily figure is £10. A daily number is easier to hold in your head than a monthly total, and it makes overspending visible straight away. Spending £25 on a Saturday is not a disaster, but you will know that you have borrowed from the next two days.

Step 5: Separate the weekly and daily spending

Some spending is regular but lumpy, such as a weekly food shop. Rather than counting it day by day, set aside a weekly amount for it and use the daily figure only for the remainder. Many people find this stops the early part of the week feeling flush and the end of the week feeling empty.

Step 6: Build a small buffer

Unexpected costs are the main reason budgets fail. A prescription, a bus fare when your bike breaks, a birthday present you forgot about. Aim to hold back a small buffer, even £10 a week, in a separate pot or savings account. When the buffer reaches a comfortable level, you will find the last days before payday much less stressful.

Reducing fixed costs

If your bills take up almost all your pay, there are a few places worth checking:

Tracking without the stress

You do not need to record every purchase. A quick check twice a week is usually enough. Look at your balance, compare it with what your daily figure says it should be, and adjust. If you are ahead, resist the urge to spend it all at once. If you are behind, trim the next few days rather than panicking.

What to do if you run short anyway

Even good plans sometimes fail. If you think you will run out before payday, act early. Speak to your bank about overdraft options, ask creditors for a short payment holiday, and contact your employer if you need to discuss an advance. Avoid high-cost short-term loans, which can make the next pay period worse. Free debt advice is available from StepChange, Citizens Advice and National Debt Line.

Budgeting between paydays is a skill, and it gets easier with repetition. After two or three cycles, you will know your own patterns and be able to plan with confidence.

Go to the payday countdown

This article is for general information only and is not financial or legal advice. For personal guidance, speak to a qualified adviser or an organisation such as MoneyHelper, Citizens Advice or ACAS.