How To Create A Budget For October That Will Jumpstart Your Financial Plan
It’s officially fall in Western Pennsylvania! The air conditioning has been off for a few weeks, pumpkin flavored everything is in full swing and the cooler temperatures are setting in. And October this year has another benefit for many Americans, a 3rd paycheck. If you’re paid bi-weekly and your first pay of the year was on Friday, Jan 10th, you’ll be one of the lucky recipients of the 3rd paycheck this month and I want to help you make the most of it! (Don’t worry, if your first paycheck was on Jan 3rd, you. received this benefit already in July and will again in January).
Thursday starts us off with the final 3 months of the year. I know this one has been a doozy for the first 9 months, let’s make the last 3 extra impactful! Are you with me?
What most people are inclined to do is pay off large amounts of debt with that extra pay. Was that what you were thinking too? It's surely not the worst idea in the world, but there might be better ways to protect yourself and get ahead.
Keep reading for 3 things to do before you pay off debt:
1. Start your emergency fund. If you don't have any money in an account specifically for emergencies only, you're more likely to borrow again when you run into a need like a hot water tank blowing, furnace goes out, or some other equally as painful thing happens that you can’t cash flow. Even having a small emergency fund will help put some cushion between you and Murphy. You can’t get ahead financially without having a little pad to bounce off. Just make sure that your emergency fund also has a clear definition of when it should and shouldn’t be used.
2. Start aging your money to get ahead of the next month. Do you feel like you're always living paycheck to paycheck? Literally, waiting on payday to make your mortgage, car payment or bills? Aging your money will mean you actually have money left in the bank when you pay bills and that's a great place to be. When you’re living paycheck to paycheck, the dollars you’re using right a way are only 1 day old. As you begin to age your money, your money sits in your account for days and eventually weeks before it’s needed. This might not pay down your debt, but it puts you in a much better position in order to do so plus provides so much stress relief. I recommend you age your money 30 days, and starting with extra pay will help you get halfway there.
3. Evaluate your immediate upcoming needs. If you haven't been good about aging your money, an emergency fund or sinking funds before now, you'll want to consider big expenses that you can rely on coming up. Will you need tires for your car? An inspection with some work to be done? Is your furnace on it’s last leg going into winter? Do you have a plan to pay for Christmas in cash this year? Do you have something else that you can easily foresee will happen you just don’t know when?
We plan for these ‘things that just keep happening’ with what are called sinking funds. You can use a digital envelope system, additional bank accounts or a literal envelope system to start sinking funds for the expenses we can predict to happen with somewhat certainty.
It can feel incredibly rewarding to get these wins under your belt and putting yourself in a better position before paying off debt. That way when you do pay off your debt, you can focus on the win that brings you and keep moving forward.
Now that you know what to do with that extra pay, get started on your October budget before the month begins.
Don’t forget these 9 expenses for your October budget
Halloween decorations, cards, costumes and candy. The average American spends just over $86 on Halloween every year, for a grand total of a $9 Billion holiday every year. Wow!
Oktoberfest. Growing up in a small German town, this is what October is all about! It seems like everyone’s getting in on the fun these days with Oktoberfest and you can too…just make sure you plan a little extra in the entertainment, dining out or however you might categorize it. Prost!
Football. It might look a little different this year and there’s no tailgates or home games, but if you plan on hosting your friends to watch the big game or meeting somewhere out, make sure to include it in your budget or it could be a big bust for your finances.
Even if your kids are doing school online, fundraisers are in full swing since the normal concession stands and bazaars can’t be held. If you can find it in your budget, it’s great to support your local kids and schools.
Winter tires. Depending on where you live and what you drive, you might need winter tires on your car. Maybe not for October, but it’s a lot easier on the budget to save a little over a few months in a sinking fund.
Fall and winter clothing. Don’t be shocked when little Vinny puts his pants on and looks like he’s in a flood. Kids grow quick and you need to be prepared for some new fall and winter clothing. Consignment and FB Marketplace sales are a great way to take out the old and bring in the new! You can also get creative trading with friends if they have kids of similar ages.
Increased utility bills. The air might be off, but that means the heat will go on soon! Consider putting your utilities on budget billing to eliminate the element of surprise.
Christmas, holiday hosting and travel. Plan ahead, not behind! What if you save up from October to December this year to pay for Christmas as you go, instead of paying for it January to March? Imagine the peace you’ll feel come January and the joy you’ll get in the giving knowing it’s all paid for. This way, you can also take advantage of some great Black Friday sales since you have some money saved up!
Family photos. Fall seems to be a popular time of year to have your annual family photos taken to share with your Holiday cards. Don’t let this one get you last minute….add your favorite photographer to your October budget.
By creating a spending plan before the month begins, you’ll feel more in control of your money and you’ll have more left over at the end of the month! If you need more help saving money, download my 20 free tips to saving more and spending less to get you started!