When you live on last month’s income, the benefits are endless.  You will only be budgeting the money you already have, you will have a built-in buffer to never overdraft and you will have peace of mind knowing there is an entire month’s income in savings.  When you are tired of being stressed out living paycheck to paycheck and hoping you scheduled your bill payments at the right time of the month, it is time to start living on last month’s income.

If you aren’t convinced to live on last month’s income just yet, read:  The Secret to Eliminate the Stress of Living Paycheck to Paycheck

How to save an entire month’s income and take the stress out of budgeting.

1.  Look at your budgets over the past few months and determine the average amount of money you need to live on for one month.

If you are just beginning to budget, you may just need to overshoot your anticipated monthly expenses to play it safe.  For example, if your expected expenses total $3,000, you will want to save $3,500 to allow for some wiggle room.  If you have been budgeting for a while, take the average of 3-5 months and save that amount.

2.  Reduce your spending

There are so many ways to cut costs!  There are multiple changes you can make to your eating habits (not eating out, meal planning), change your entertainment expenses (cable, movies, phone, etc.), canceling memberships (gym, beauty products, magazine subscriptions) and more!

Not sure how?  Check out:  15 Effortless Changes to Quickly Save $1,000

Take a look at your life and decide if there are expenses you could cut out, even in the short-term, to help you save up one month’s income FAST.

3.  Increase your income

There are a million ways these days to increase your income.  Look around your home and see if there are any items you could sell.  I have easily made $1,000 – $2,000 in the last year selling things around my home that aren’t of use to me anymore.  Pick up a side job – babysitting, pet-sitting, yard cleanup, cleaning homes. Get a second or third job (some places hire for seasonal help).  If you are gifted in writing/grammatical skills you could be a freelance writer, proofreader or even start a blog!

Check out:  3 Amazing Benefits of Selling Your Stuff

4.  Budget meticulously

Put your budget under a microscope.  See if there is a category you have budgeted for that could be cut out for one or two months.  Do you budget $200 for gas, but typically only spend $150? Take the extra $50 and designate it to your one month’s income savings.  Really monitor your electricity usage for the month to keep your bill low.  Find places to take money away to put toward your savings.  Short term sacrifice for a few months will help you reach your goal that much faster.

Get our FREE Monthly Budget Forms to get set up your budget and start saving!  Get instant access by signing up below!

If you already have an entire month’s income in your savings, start living a month behind today!

Once you have the money saved, you need to develop a system to ensure you don’t spend any of the next month’s income early.

I would highly recommend having a separate account within your checking account (most banks will allow you to have multiple “named” accounts within your checking account).  We live out of 6 bank accounts (Checking, Emergency Fund, Christmas/gifts, Loan Savings, Medical Savings, Baby Savings). Every month when the current paychecks are entering our main checking account, I will transfer them into our Emergency Fund (which always has $1,000 in it).

Right before the next month begins, after our budget is finalized, I will transfer the amount of the paychecks from the Emergency Fund into our checking account.  This ensures we don’t spend what was intended for the next month. You can name your accounts whatever you want, but I find it is less tempting/risky to spend next month’s money when it has been moved out of the checking account.

Use our FREE Savings Countdown Sheet to start saving up one month’s income.  Get it now by signing up below!

When you start living on last month’s income, your budgeting will be less stressful and you won’t worry about having enough money for the month.  It may take you anywhere from 1 month to 6 months to save up and get a month ahead, but if you work on reducing your spending, increasing your income and budgeting meticulously, you will reach your goal!

Are you just starting to live a month behind?  Or have you already been doing it?  Let me know how it is going and what you love about it!

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