Do This Every Time You Get Paid… Learn How to Set Up A Payday Routine
Do you have money coming in but no idea where it’s going? You get paid, take care of a few bills and then POOF, it’s gone? Would you like to change that?
My name is Lucas and while I was always able to cover my bills, I never had any money to put towards my goals. But, once I created a payday routine - I went from zero savings to the best financial position of my life in less than 15 months.
I call it The Big Split Method and today it’s my gift to you. If you’re tired of doing your finances from a place of lack and survival, join me. (If you prefer to watch the video, please check it out here…)
You Don’t Need A Budget
Most people know that a budget can help but they have a hard time sticking to one - ever thought about why? They’re boring, tedious and restrictive. One of the first things they have you do is get rid of “unnecessary expenses” but in my experience, those are the ones that make life fun.
Traveling and fancy dinners - those are necessary for me to do me, I’m not going to get rid of those!
I want a financial plan that supports my lifestyle, not restricts it.
And that’s the beauty of a payday routine - the money comes in, I split it up, pay myself first, and take care of my responsibilities. It’s faster and easier than budgeting, it’s flexible, and it works in the background so I can focus on more important things. Let’s take a look.
How To Create A Payday Routine Step 1:
The first step to creating a payday routine is to get clear on your financial goals and responsibilities.
So, what are your goals?
Grow your savings?
Pay off debt?
Build an emergency fund?
Buy an investment property?
Start a new business?
Travel 3-4 times a year?
I invite you to sit down for a little and brainstorm some ideas - write down every goal that comes to mind. Then do the same thing with your monthly responsibilities - From business expenses and taxes to living expenses, write it all down.
If you’re anything like me, you probably have a LOT of responsibilities and goals. So many that you may feel a bit overwhelmed and that’s normal. So the next step is to simplify.
Take a look at all of your responsibilities and goals and group them into a few main categories. For example: My business is a big area of my financial life so that’s one category. Taxes and money I owe to other people is another category.
I have a lot of different financial goals so to keep things simple, I grouped them in to one category and I call that, paying myself first. And when it comes to living expenses, whether it’s the mortgage, a car payment or taking care of my health, I grouped all of it into a category I call lifestyle.
The idea is to distill everything in your financial life into three or four main categories. The less you have, the easier and more effective your payday routine will be.
How To Create A Payday Routine Step 2:
The idea with a payday routine is that each time you get paid, you split up the money and send a little to your goals and responsibilities. When you have 60 different things to take care of, it’s overwhelming BUT when you have 3 or 4, it’s easy.
Once you have distilled everything down to a few main categories, the 2nd step is to set up accounts that you can send money to. And there’s a couple of ways to do this..
When I was 17, My Uncle Owen introduced me to the envelope method - the idea is that each time you get paid you split up the cash and put a little into each envelope. You have one for rent, one for groceries, car payment, etc.
It worked really well but I didn’t have much self control and would usually spend the cash before I could split it so, I didn’t stick with it. But after years of living paycheck to paycheck, I remembered my Uncle’s advice and decided to revisit the method.
I don’t get paid in cash - when I receive money from a client, it get’s deposited into my business account so physical envelopes were not going to work. I needed something faster and easier so, I set up digital envelopes.
Because I have four main areas, I now have four digital envelopes:
The Pay Myself First account
A business account
An account for money I owe to others
An account for my lifestyle.
This makes my payday routine really simple - money comes in, I split it up and send it to the four accounts. Easy.
Now it’s your turn.. Whether you use envelopes in a drawer, jars on the counter or bank accounts, I invite you to set things up so that every time you receive money, you can split it up and send it to your main categories.
It should be easy to do and require very little time because let’s be honest, if it’s a pain in the ass to do, it’s not going to get done. My routine takes about four minutes each time I get paid.
If you have more than four main categories, you’ll need more bank accounts which is not ideal so I invite you to revisit step 1one to see what can be consolidated. The less categories you have, the easier and more effective your payday routine will be.
How To Create A Payday Routine Step 3:
The third step to creating a payday routine is to choose how much money you’d like to send to each account.
What do you need to cover your lifestyle, business, taxes and debts? How much would you like to put towards your financial goals?
If you’re not sure, start with what you do know - what percentage do you normally pay for taxes? based off previous years, I knew that I would need 20-25%.
And while most people recommend saving 10%, that was way to low for me. I didn’t save a dime in my 20’s and 30’s and needed to make up for lost time. I wanted to save 20-40%.
If you love numbers, calculate it all out but if not, ask yourself a few questions; What financial problems are currently causing you the most stress? Debt? Back taxes? Maybe give them a larger percentage until they’re gone.
Which areas could use more more and which areas have too much? If your current living expenses are out of control, lower the percentage and if you’re tired of eating ramen and peanut butter and jelly, increase it.
I had a recent client with $90k of debt and while he’d like to save, it’s not his current priority so he started off by putting 40% towards debt, 40% to live on, 15% to taxes and 5% towards his savings.
Another client wanted to grow her savings and pay off debt so she put 30% towards each, lived on 30% and set aside 10% for taxes. For the last 7 years I’ve split every check into four quarters because it’s easy math and works well for my lifestyle.
The goal is to find what feels best and most realistic for you. Pick starting percentages and test them out for 3-6 months. If it’s working well and feels good, keep going. If you’re not making progress, or it feels stressful, change up your percentages.
Once you’ve picked your percentages, you’re ready to implement your payday routine.
Every time you receive money, whether it’s 50 cents or $50 million, split it up and send it to your financial goals and responsibilities.
A Simple Payday Routine Can Transform Your Finances and Your Life
Think about the path you’ve been on for the last few years or even decades. Are you tired of staring at an empty savings account and not getting any closer to achieving your goals while banks and insurance companies get plenty of your money?
Spending money with no plan is the old way - it’s playing defense, living in survival mode. If you’d like to shift the game and play offense, create a simple payday routine and take care of your goals and responsibilities first.
I Used a Payday Routine to Improve My Finances at Every Level
In the first month of splitting my money, I had a little extra. By month five I paid off $25k of debt. By month twelve I had a full years with of living expenses saved up. By month fifteen, I was in the best financial position of my life. And with each passing year, they get better and better.
This simple routine helped me so much that I began teaching it to friends and family. And now, The Big Split is my gift to you. Take the basic principals I shared with you today and try them out.
And if you’d like a more personalized and detailed approach, consider The Big Split Boot Camp. It’s just you, me and your finances for a few hours over 1 week. We’ll look at the Good, The Bad and The Ugly, we’ll get you organized, streamlined and splitting your money by the end of the week.
And when life throws financial curve balls at you, or you hit a wall and don’t know what to do, I’ll be there to help you. The boot camp comes with 6 check in calls that you can use over the first six months. Click here to fill out an application for a free coaching session with me.
Three Steps To Create and Implement a Payday Routine
Get clear on your financial goals and responsibilities and distill them down to 3 or 4 main categories.
Set up accounts or envelopes for each category
Pick a percentage, split it up and transfer the money BEFORE you can spend it.
Thank you for taking the time to watch this, it means the world to me. If you know anyone that could benefit setting up a payday routine, please share this with them.
Thank you so much for your time and energy and thank you for choosing to show up for you!
- Lucas Z.