Month Ahead Budgeting Method

 At the Financial Wellness Center, we emphasize the importance of having an emergency fund. Having 1-3 months’ worth of expenses in cash is one of the most effective ways to protect yourself from financial hardship, such as bankruptcy or falling into unmanageable debt. In this article, we’re going to take that concept a step further by exploring the benefits of budgeting a month ahead. 

Traditionally, paycheck-to-paycheck budgeting means that your paycheck is deposited into your bank account, and that money is immediately used to cover your expenses until the next paycheck arrives. While this method offers the instant gratification of using the money you’ve earned, it often comes with the risk of running out of funds before the next paycheck. This can create stress, whether it’s waiting for a few days or even just a few hours before you can access more money. The solution? Budgeting a month ahead. 

Money Ahead Budgeting

In this approach, “being a month ahead” means using the money you earned last month to cover your current month’s expenses. For example, let’s say you make $2,000 a month, and your monthly expenses are less than that amount. By the 1st of December, you should have $2,000 sitting in your checking account or wherever you receive your direct deposit. You would budget that amount for the month—say, $500 for rent, $200 for food, $100 for shopping, etc. You would then spend that money throughout the month of December. Meanwhile, as you continue working and receiving paychecks, your income from December just accumulates. When January 1st arrives, you’ll have another $2,000 waiting for you, ready to cover the expenses for the new month. The cycle continues.

This method also functions as an additional layer of financial security. If, for example, you were to lose your job, you’d have until the end of the month to find a new one, thanks to the money you’ve set aside for the following month. Similarly, if an unexpected expense—like a car repair—arises, the funds you’ve been accumulating could cover it without putting you in a difficult financial position.

While having this extra cushion is certainly helpful, it’s important to note that it’s not a replacement for an emergency fund. Whether you choose to adopt the “month ahead” strategy or not, an emergency fund is still essential. That said, there are many other advantages to budgeting a month ahead. For one, you no longer need to worry about your bills aligning with your paycheck schedule. You’ll also have the peace of mind that you’re only spending money you already have, and it becomes much easier to plan for the month 
ahead with confidence.

Next Steps with this Method

Now that we understand the benefits of budgeting a month ahead, how do we actually do it? The one downside of this system is that it can be difficult to set up. There are two main options: either you save up a month’s worth of expenses or you have an extremely cheap month. Personally, because I am a student living at home without many expenses, there was one month where I spent almost nothing, and let the savings carry over to the other month. I think this option is viable for people living with family, and those who just had a significant increase in income but still have low bills. The second option which is probably more common, is saving up a month's worth of income, then one month living off that while letting the income accumulate. One tip for this is to purposefully pick a month you know will be cheaper. Maybe in May your car will be paid off, or during the summer when you don’t have tuition payments. 
 
Ultimately, budgeting a month ahead can provide you with greater financial peace of mind. While the initial setup may take some discipline or sacrifice, the long-term benefits are well worth it. By becoming a month ahead, you eliminate the stress of living paycheck to paycheck, giving you greater control over your finances and more freedom to plan for the future. It’s about reducing financial anxiety, managing your money more effectively, and creating a secure foundation for whatever life throws your way. 

 

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