How do you get a month ahead in your budget and start living on last month’s income?
We’re so glad you asked!
As you get going with your budget, getting a month ahead is key if you’re someone who is trying to break the paycheck to paycheck cycle. And it might take time, but you’ll get there.
What Does it Actually Mean to Get a Month Ahead With Your Budget?
Getting a month ahead with your budget means your budget for next month is completely funded before the new month rolls around.
What is It Important to Get a Month Ahead With My Budget?
Getting a month ahead with your money is a feeling like no other:
- You don’t have to time paychecks to bills
- You aren’t worrying about late fees
- You’re not paying for overdraft fees
- Want to become debt free? This is a key step
- You’re not afraid of what bills lay lurking in the mailbox
- You no longer live with paycheck to paycheck stress
- You’ll get closer to your financial goals
- It acts as a mini emergency fund
Getting a month ahead means you’ve built a cushion of cash that pushes you further and further from the financial edge. If you are trying to break the paycheck to paycheck cycle, getting a month ahead is like taking a giant step away from that pit. Imagine—the first of the month arrives and you’ve already saved the money you need for the month. Amazing, yes? And that means any money that arrives this month can be used for the following month. You are perpetually ahead.
Where Should I Physically Put This Money Once It’s Saved?
In your checking account.
How Do I Get a Month Ahead?
Well, first and foremost, You Need a Budget. We all do! To get a month ahead, there are a few simple (but not always easy) steps.
- Create a budget (it needs to be a zero-based one to give you an accurate picture).
- Fund your expenses for this month.
- Once you can fund expenses for this month, start funding expenses for next month.
- Rinse and repeat. Once you have all the money you need for the month on the first of the month, you’ve arrived (or you can look at your Age of Money in YNAB to track your progress).
- Experience the blissful peace of getting a month ahead with your budget.
The key to getting a month ahead is prioritizing. Let’s take a look at a few months of a happy new YNABer as they work to get a month ahead.
In this budget, the happy new YNABer started mid-month and came in just under the wire to pay their monthly bills. When all was said and done in February, there was just $25 left in the budget. $20 in groceries and $5 in transportation—shown in the green pills below.
This happy new YNABer is living month to month, and is about to get a whole lot happier as they experience the added margin of being a month ahead with their budget. But we’re getting ahead of ourselves. What happens next?
Last month our happy new YNABer was just getting started in flexing their prioritizing muscles. In March, they started setting money aside for non-monthly expenses like the six-month car insurance bill, auto maintenance, and that expensive but essential yearly Prime membership renewal.
What’s happening behind the scenes is that our happy YNABer is learning to live on less money. It’s easier than they thought! Their budgeting muscles are getting stronger and stronger as they rein in the spending that doesn’t actually matter to them. This means they can prioritize what is important to them. At the end of March they have $775 left in the budget.
Month Two: $775 left in the budget (this is a partial budget view)
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In April, something great happened for their budget: they got a decent tax refund. But since they’re living on less, they didn’t need that extra money, and they’re focused on getting ahead. So they budgeted that money in May. How do we know? Let’s click on the header.
See that $1100 budgeted in the future? That means our happy YNABer took some of that tax refund and started assigning it to jobs in May. Sure, it’s not enough to fund all of May, but it’s a really good head start.
Now you may be thinking, “Do I need to get a tax refund to make this happen?” Nope. Tax returns can provide a nice immediate boost, but you can do it any number of ways. Some people are paid every other week, and that means twice a year there are months with three paychecks. So they live on two paychecks and use the third one to get ahead. Look for those opportunities, take advantage of them when they happen, but even without them, you can still inch your way there.
Let’s look at May.
Now there is $1,800 budgeted for the future thanks to the tax return and cutting back in other places that didn’t matter as much.
Also, look at the total activity on the right—they’ve spent $3045 in the month of May. If they are spending around $3000/month and just pushed $1800 into June, you can see they’re getting close to being a full month ahead.
This is what June looks like on June 1st—before a single paycheck has arrived.
They’ve budgeted for immediate obligations and debt payments. The student loan is covered. Groceries are covered. These dollars are ready to trounce on those bills the minute they arrive. All these categories are funded before a single June paycheck arrives.
By the time June is over, our budgeter has managed to push $2,555 out into July.
Remember—our budgeter is spending about $3000. We are so close to having a full month funded ahead! Sure enough, by the time July is over, our budgeter has budgeted for all of August.
On August 1st, they open their August budget—again, before a single August check has arrived—and see this: green all the way down their budget. They are a month ahead! WOO!!
The money they make in August will fund September. The money they make in September will fund October. And just like that, our budgeter is a month ahead.
When you’re a month ahead, and you’re also funding non-monthly expenses, your dollars sit around and just—grow old. They age. And that’s our fourth rule: Age Your Money. Say goodbye to that paycheck to paycheck stress (you won’t miss it). And those big life dreams you had that used to seem so far out of reach? They feel a little closer now with each passing month.
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