When most people think about starting a budget (and if you haven’t already set up a family budget, you really SHOULD!), they think about keeping track of how much money they need and how much they’re spending. Those who really give this a lot of thought consider which budgeting system might work best for them, or whether having multiple savings accounts might be a useful long-term budgeting tool.
But there’s one important detail missing: sometimes the most important variable in your family’s budget is not about how much, but about when.
That’s what this post is about.
To be fair, not every family’s income appears like clockwork; those of us who are self-employed, own our own businesses, or otherwise have variable income need different budgeting strategies.
But if your money supply is based on the calendar – whether because you have a monthly paycheck, or monthly government benefits – you need to be able to tailor your spending and your bill payments to match this schedule.
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Budgeting Based on Income Timing: Tips to Get Started
Even though the specifics of how to budget based on income timing may vary, many of the underlying principles are the same. For this post, I’ll give two examples for each section: one, based on a single monthly pay date, and the second, for someone receiving government assistance – in this case, just to mix it up a little, in the United Kingdom. (And it should go without saying that I am NOT a financial planner, and this information is for educational purposes only – but in case you had any doubts, there you go.)
Regardless of your personal circumstances, though, the most useful starting point is a clear record of money coming in and the essential spending it has to cover. From there, it becomes easier to identify timing problems, the budgeting chaos that results from “surprise” expenses, and the chronic strain of a budget that’s regularly short. Each of these situations needs a different response.
Put payment dates beside bill dates
The first thing you need to do is map out a calendar of what’s due when, and how this schedule compares to when you actually have money coming in.
The monthly paycheck example (US-based):
For example: For as long as I’ve known him, my husband of nearly twenty (!) years has been paid on the 25th of every month. The only time this varies is, say, December; whenever payday falls on a federal bank holiday (as is the case for Christmas every December, and some years for our Thanksgiving in November), his paycheck arrives one day early.
For bills that are due the first of the month, as things like our credit card and other utilities often are, this is not a problem. However, for other bills that regularly come due on the 23rd of each month (specifically, for some reason, our mortgage), this creates a cash flow issue. This means that every month he needs to plan ahead and make sure we’ll have enough money in the appropriate account to cover the mortgage. If our spending is out of whack in another area – such as higher than usual groceries or utilities – he gives me a heads-up so I can work on trimming our spending in those areas.
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IMPORTANT: If you’ve done this and you still just can’t make the timing work, try contacting the companies responsible for your regular expenses to see if you can change your due dates. I’ve done this before with credit card companies, so our bill comes due the first of each month instead of right before payday.
Monthly government benefits example (UK-based):
Likewise, if you count on UK Universal Benefits for part or all of your income, the first step is to make a list of all income expected during the month, including wages where relevant and each benefit payment. (Be sure to check the actual statements or award information, rather than assume that every payment will stay the same! And when circumstances change, use the appropriate official service to establish what needs updating.)
Once you’ve plotted out the money coming in on a monthly calendar, map out your bill due dates on the same calendar. A household can appear to have enough income across a month, but still run short before a particular payment hits your bank account. Seeing the dates together allows you to decide which money needs to be held back for the next essential bill.
If you ask a provider to change a payment date, wait for confirmation and check how the first adjusted payment will work; don’t just cancel an arrangement and assume the amount due has disappeared.
Plan for “surprise” expenditures
The next thing thing you need to account for is those “unexpected” expenses that, with a little hindsight, aren’t really that unexpected. As long as you have kids in school, they’ll need new school supplies each year. The same is true for family members outgrowing their clothes or shoes, appliances needing replacement over time, cars needing service, and other “life happens” spending categories that show up on a less predictable schedule.
When you get paid monthly (US example):
For me, the larger surprise expenditures have never bothered me as much, for some reason, as the smaller but seemingly more persistent ones tied to raising kids in the 21st century. Maybe it’s just because I grew up in a different time and place, but I’ll never forget how annoyed I got when my kids started elementary school, and every August a week before school started, a lengthy list of required (and, as time went on, expensive) school supplies showed up in our mail or my inbox. (I remember wondering every time how on earth families with limited means were supposed to supply a dozen glue sticks and multiple boxes of crayons, but only in certain quantities/of a certain brand!)
Honestly, the “unexpected” expenses part of raising kids is one of the reasons I first started Kimmie and Essie on an allowance several years ago. I was sick of being the one to have to suddenly produce funds for friends’ birthday gifts and other discretionary spending, for children who seemed to think our money grew on trees. By giving them an allowance with fixed categories – 10% for charitable giving, 30% for day-to-day expenses (like neighborhood walks to buy ice cream or a slushie), 30% for short-term “unexpected” expenses (friends’ birthday gifts or tickets to Homecoming), and 30% for long-term savings (such as new Airpods or an iPhone) has taught them how to make sure they have money to cover all their spending categories.
For grownups with a set monthly payday, the principle is the same. Figure out what you spend on these “unexpected” costs over a year, try to plot out when they occur, and set aside a little money each month to pay these expenses when they occur. Doesn’t matter whether you use an envelope system or separate bank accounts; either way, you’re marking that money to cover this cost when it occurs.
Monthly Universal Benefits example (UK-based):
Families on a fixed monthly government benefit income can also use this principle to plan for those “unexpected” expenses that occur at unpredictable intervals over the course of the year, instead of recurring monthly. Once again, the key starting point is to try to wrap your brain around these “unexpected” costs. This means tracking your expenses over time so you can look for recurrent patterns in these “surprise” categories, and get a sense of how much you spend on them each year.
If you’re not used to tracking your expenses this way, start by separating out essential spending, occasional costs, and discretionary purchases. (And when you’re working on this, don’t overthink it. A simple running list you can remember to update regularly, whether in a Notes app on your phone or in an analog format like your Bullet Journal, is more helpful than a complicated spreadsheet you can’t keep up.)
Once you have a handle on how much you usually spend on these “surprise” needs over a year, divide that number by 12 to figure out how much you should ideally be saving for them each month. For example, setting aside £5 a week creates £40 over eight weeks if none is spent. This is an illustration of planning, not a claim that £5 is available to every family or that it will cover a particular expense. Where there is no spare money, either adjust your spending across the board, or focus first on support and the bills that need attention.
Trim spending and/or check support before paying interest
But even when you’ve planned for the more predictable “surprise” expenses, there are still times when something will happen that’s outside what you planned for. Like when we learned, shortly after buying our current home and again last year, that our heat pump was about to die and needed replacing. There are a few different strategies that you can use in scenarios like these:
When you get paid monthly (US)
In an ideal world, every household will have a rainy-day fund set aside (hopefully in a separate bank account that you otherwise don’t touch) for scenarios like this. But if that’s not the case for your family, consider your options carefully before you decide what to do.
If you haven’t already tightened your budget and trimmed those recurring bills (e.g., called your utility companies to make sure you’re getting the best possible rate for what you actually use), now’s the time to start. And if there are other costs you can put off or avoid for the time being – like holding off on a needed but not-truly-essential-right-now car repair (e.g., getting the AC on your car fixed as we’re heading into winter) – then by all means, do it.
Next, look into what the interest rates are on your various options. See if the company you’re working with for this unexpected expense – e.g., the HVAC company installing your new heat pump, or the store where you’re buying your new appliance – has a zero-percent interest financing option available, or a low financing option. Or if you have a mortgage, see whether you qualify for a home equity loan (also known as a second mortgage, home equity line of credit, or HELOC). We’ve done this before to finance large unexpected home expenses, and the interest rate was always quite competitive – much more so than carrying a credit card balance, which is always a last resort.
Universal Credit recipients: Using a Budgeting Advance (UK)
For eligible Universal Credit recipients, a Budgeting Advance (BA) for unexpected costs may help with certain one-off expenses. It is repayable and has eligibility and permitted-use rules. Keep in mind, though, that BAs are for truly unexpected short-term needs; they’re not a replacement for poor budgeting, or not having a budget at all, in the first place.
In other words, yes you DO need to repay that BA over time; it’s not an extra grant in addition to your regular support. Likewise, BAs are not intended to cover day-to-day expenses like food, household bills, rent, or debt repayment. Other assistance depends on location and circumstances. Check current council information and speak with an independent adviser about what support you may qualify for.
Most importantly, do NOT budget around an application being approved until the decision has been made. MoneyHelper’s explanation of Budgeting Loans and Budgeting Advances helps distinguish the schemes. Even interest-free borrowing reduces the money available later when repayments are taken, so the effect on future payments belongs in the budget.
Examine a borrowing option against the actual shortfall
Whether you’re looking at a loan from your bank/credit union, financing an unexpected larger purchase, or putting that expense onto a credit card and hoping to pay it off over time, you need to have a clear sense upfront of what you’re getting yourself into. Otherwise, you’re just setting yourself up for more money chaos and budgeting uncertainty down the road.
Getting paid monthly (US example)
As noted in the previous section, covering unexpected expenses through a credit card balance should be your LAST resort, since interest rates on most cards are well over 20%. Shop around as much as you can to see what your options are; this will be an investment of your time (vs. your money) that can save you a ton later, but with that upfront time cost.
If you need a new appliance, see which stores are offering which financing promos; the store with a slightly higher sticker price for the same appliance may save you money in the long run if their financing options are less costly over time. Ditto if you need a new furnace or heat pump; Some companies may have different promotions, coupons, or specials, especially for new customers; check on their websites, or see if your friends and neighbors have recommendations. Or if you have multiple banks that you work with in the first place, see who can offer the best rates on short-term loans or HELOCs.
If you absolutely must go the credit card route to cover an unexpected large expense, look into balance transfer options to keep your interest payments at a minimum. As long as you have a committed plan to pay off the balance before you start incurring interest payments, this strategy can save you a bundle in the long run – but if you don’t pay it off before those interest charges start, you’ll be stuck with them.
Monthly benefits scenario (UK example)
Receiving benefits does not by itself establish whether a loan is affordable. UK readers looking at loans for people on benefits should check eligibility, the full repayment cost and how each payment would fit around essential family spending. An application is not a guarantee of acceptance. Start with the amount genuinely needed after any available support or savings, then examine the proposed term and repayment dates. Leave room for the essentials that still have to be paid if another problem occurs.
Above all, keep in mind that your monthly payment should work within the current budget, without depending on benefits increasing or a hoped-for job arriving. If borrowing is repeatedly needed for ordinary living costs, this is a clear sign that you need to rethink your entire budget, because your income isn’t matching your expenses. Just getting yet another loan can add a payment to a budget that was already short. Independent debt advice can help identify the appropriate next step.
Keep the routine manageable with regular check-ins
Regardless of where your money comes from or how often it hits your bank account, my final piece of advice is to revisit your projections at least once a year. Things change over time; elementary school supply lists give way to high school sports fees and then college tuition, and your family budget needs to keep up. You also need to account for other expense category changes beyond your control, such as rising global energy costs.
Besides this annual big-picture look, be sure to set aside a little time each month for finance-managing and bill-paying. Choose one regular time to check your balances, schedule upcoming payments, and account for any change in circumstances. Keep relevant letters and account details together, and note any payment arrangements or plans you’ve set up.
No family budget can account for every unexpected expense. What a budget CAN do over time, though, is simple: It can make the decisions clearer, whether it’s which bill to pay first, what options you have when things go sideways, and which option is most sustainable in the long run. That clarity is more useful than trying to make a tight budget appear comfortable by ignoring the costs that come next.
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