This step is a hugely important advance in getting control over your finances with the ultimate goal of moving away from living paycheck to paycheck and instead working towards a situation in which you live on last month’s income. Being one month ahead of your finances takes away a lot of stress and worries and gives a small extra financial cushion in your account. I’ll discuss the advantages and disadvantages of this practice first before looking at how you can implement this.
Being one month ahead essentially means that you are using last month’s income for your current month’s expenses. It means that you are ahead of your finances by having an extra month’s pay in your bank account. The money that you are earning this month won’t be used until next month.
The advantages of getting one month ahead
The biggest advantages of being one month ahead include:
- It doesn’t matter if you get paid 2 or 3 days late, or if a bill comes in earlier than expected.
- You don’t have to worry about going out next week instead of this week if you haven’t yet been paid.
- If a bill is larger than expected or budgetted, you don’t have to worry about not having the money and it gives you time to readjust your budget next month.
- Lastly, if you have a variable income, you can see a lower income month coming with some warning in order to make any necessary adjustments in your spending .