Your 6-point payday checklist

Everybody loves payday. Here are six things you should be doing each time you get paid that can help you achieve your financial goals.

Payday is an important day in your money calendar. Developing positive money habits requires a consistent routine, and your payday is a great opportunity to put these into action. It is often the day when your decisions will push you towards your financial goals or the temptations and bad habits will hold you back.

Before you start creating your payday routine, it is essential to have a clear understanding of your financial goals. What are you trying to achieve with your money? Do you want to pay off debt, travel, save for a house deposit, or invest in your retirement? Whatever your goals may be, make sure you have a clear idea of what you’re working towards. This will help you prioritise your spending and ensure that your payday routine aligns with your overall financial plan.

Use the below checklist to help you navigate payday with ease.

1. Check your payslip

Whether you work for a big multinational corporation, a local business or are a sole trader/business owner, it is important that you check your payslips and invoices when they come in to make sure they are correct. Both human error and computer error (or intentional error) can mean you are missing out on what you are entitled to.

You should also understand your superannuation entitlements and check that the correct contributions are being made into your account.  If you have student debt that your employer is required to pay on your behalf, make sure that this has been accounted for correctly. If you are paid hourly, your hourly rate and the number of hours you worked at that rate should be clearly stated on your payslip. Check for any loadings, bonuses or other allowances you are entitled to, as well as any other relevant deductions.

If you are a sole trader/business owner, check that you have been paid the correct amount stated on your invoice for the goods or services you provided.

→ Related: How to work out if you’re being paid correctly

2. Pay yourself first

One of the oldest rules of money advocated by many experts is to pay yourself first. This means that before any other expenses are paid, transfer money into your savings, investment, and/or retirement accounts. Arrange for the money to be transferred automatically as soon as you get paid so that you are not tempted to spend the money.

Paying yourself first ensures that you are looking after your future and prioritising your financial goals.

3. Put money towards your emergency fund

Your emergency fund is one of the most important bank accounts you can have to help you navigate unexpected or unplanned events in life. It is generally recommended to have three to six months of living expenses stashed away in your emergency fund. Allocate a portion of your pay towards your emergency fund and arrange for this to be automatically transferred the day you get paid.

4. Update your budget

Your budget will serve as a roadmap for your spending, ensuring that you’re staying on track with your goals. Start by listing all your essential monthly expenses, including rent/mortgage, utilities, groceries, transportation, and any debt payments. Then, subtract your essential expenses from your income to determine your discretionary income. This is the money you have left over after your bills are paid, and it is what you’ll use to both achieve your financial goals and use for ‘fun’ spending.

When you get paid take another look at your budget and make any adjustments to account for upcoming irregular expenses, social events or other known changes. By doing this, you can plan ahead to make sure you are not caught by surprise. You may also find that you have a surplus of funds for the pay period and can redirect this money to your debt, savings or investments.

5. Automate your bills and debt repayments

Keep a list of your regular bills and payments and check the bills when they come in to make sure all details are correct. Schedule a reminder in your calendar or diary for when they’re due and set up automatic payments where possible to make sure you never miss a due date.

You should also regularly review your bills to check if you are overpaying for services or being charged for things you don’t need. Think about whether you can cut back on any expenses and do your research to determine if there are any better deals available or if you can negotiate a better rate.

6. Avoid impulse shopping

Payday is always the best day of the month/fortnight/week. It can be tempting to get overly excited and spend all your pay because you feel cashed up, and then regret it later when you realise you didn’t want or need any of it. It’s important to resist the urge to splurge and take a more measured approach to spending. Before making any purchases, take the time to evaluate whether the item is a necessity or a want. If it’s a want, consider whether it fits into your budget and financial goals.

In addition, allocate a portion of your budget for ‘fun’ things like shopping and going out and stick to this amount each month. By avoiding impulse shopping and taking a more deliberate approach to spending, you can stay on track with your financial goals and build a secure financial future. Your future self will thank you.

Creating a payday routine is essential for managing your finances and reaching your long-term goals. By creating a budget, setting financial goals, prioritising bills and savings, reviewing your spending, and planning for the month ahead, you can take control of your finances and make the most of your hard-earned money.

→ Related: How you can stop living from pay cheque to pay cheque

This is an edited extract from Smart Moves (Wiley RRP $32.95), exclusive to Canstar, and republished with permission.

Cover image source: Prostock-studio/Shutterstock.com