Weekly paychecks

My sister recently got a contract position in a school, which introduced both of us to a whole different kind of budgeting. Since she’s contracted, she won’t get paid on all of those lovely days off that the students have (3 days at Thanksgiving, 10 days at Christmas, etc.) nor will she be paid in the summer. So she asked for my help in figuring out how much she needs to save out of each check in order to have enough money during those breaks.

And then she told me she gets paid every week.

I used to get weekly paychecks when I worked retail, and it was pretty handy, since I could really only spend what I made in the last week. If I had a bigger surplus at the end of the month, I would transfer that to savings. It was easy, even though I wasn’t making much.

I sat down with my trusty Google Docs spreadsheets and figured out the breakdown. First, I had to figure out exactly how much she would make (net/take home) for the entire year. I used one of those handy paycheck calculators to get a close estimate, then rounded down to be safe. Then I took that and divided it by 9 months and then 12 months. The difference is what she needs to save in order to live comfortably the other 3 months she’s not working (she could get a summer contract position, but we’re assuming she won’t, but if she did, then the savings can go toward debt/a replacement vehicle). Then, I figured out her budget. She decided on five very simple categories which she mainly keeps track of mentally:

-rent (includes all utilities)
-debt (student loan payment)
-savings (for breaks/summer)
-mom (who pays for car insurance and cell phone family plan)
-everything else (food/gas/fun stuff)

So I figured out how much she can put toward each of those categories each week, which makes it really easy for her to know if she’s on track. As soon as the deposit hits her account, she can transfer some to savings, some to her student loan, and mentally set aside a bit for rent and mom, and the rest is her grocery, gas, clothes, and eating out budget for the week.

This was actually a pretty interesting exercise, and I hope that it gets her excited about having a real income again (she worked through college) and about paying off debt. She already wants to pay extra on her loans, since I’ve talked up Dave Ramsey so much, and she could save a bundle in interest even paying an extra $20/month toward her loans.

I was pretty proud when she graduated, but I think I’m almost more proud of her for wanting a budget and to pay off debt.

2 thoughts on “Weekly paychecks

  1. I like your blog, your writing style is very fun to read. Have read your blog for a while, just thought I’d give a thumbs up while I thought of it 🙂

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