Paycheck to Paycheck vs. Having a Cushion

I’ve probably touched on it a tiny bit before when I talked about budgeting apps – like how YNAB (You Need A Budget) has a goal for you to live off of last month’s income. It’s definitely less stressful. Like with anything, though, it may not work for everyone. And you don’t need to have an entire month of expenses set aside to keep the stress at bay.

This all started when I did FPU (Dave Ramsey’s Financial Peace University) last December. There was a section that talked about how much money you should keep in your checking account. I think the recommendation was something around $100. Until then, I had been borrowing money from my savings if I needed to buy something before my first paycheck of the month. Sometimes this meant “floating” myself a check and paying it back into my account when I got paid. Sometimes this meant transferring money into my checking account at the self-checkout terminal in the grocery store.

Either way, this was causing me a bit of anxiety as sometimes I couldn’t put my first check in my savings, it had to be the second or the third or the forth, and then the cycle would start all over again.

So, I decided to do a $50 cushion first as change is stressful and doing this would require me to either take the money out of my savings account or spend less money one month. I chose to spend less money and my fifty dollar cushion was born – enough to buy me some gas, if needed, and pay my water bill, which is my first bill due in the beginning of the month.

The problem with this is that I’m one of those people who like to do all of my grocery shopping in one or two trips and usually at the beginning of the month. So, I ended up stressed out when I had to cut back my grocery spending and wait to eat out. So, around this time I changed banks and decided to do the whole one month of pay thing.

I didn’t like it. I don’t know why. I don’t know if it’s because my savings took a hit or because it simply felt weird. So, what I did instead was go to a $100 cushion. This also didn’t work because I ended up stressed out again when I didn’t have enough money to cover a bill I wanted to pay early AND go grocery shopping.

After a couple of months of this, I went with one check ahead + plus whatever I needed to add to that to make it a number that was easy to remember. I ended up with a $500 cushion, and this is working out much better for me. The only problem I’ve run into with this is that sometimes I pay my bills super early.

I guess that isn’t really a problem. I rather enjoy paying bills – I didn’t when I had a bunch of debt, but I’m back to enjoying it again. ^_^ It’s probably a little weird, but I can’t wait to pay my bills. It’s why I don’t automate anything. Then I don’t get the pleasure of hitting PAY or paying extra on my electric bill. And since I remember to pay my bills, there isn’t really a need to automate it either. I do have Netflix, which is automated, and there actually is a problem with this – I forget about it.

Sometimes I move extra money that I didn’t spend into my savings instead of rolling it over to the next month, and sometimes I’ve had to move $9 back into my account because I forgot about Netflix, again. Which is another reason I’m reluctant to automate anything.

So, this is what works for me. Some people can do $100 or less. Some people rather have a whole month of paychecks in their account (assuming they get the same pay every week).

There’s some saying out there that says Personal Finance is Personal. Everyone has to find what works best for them by trying different things – different method, different software, different apps. 🙂

Hi ^_^