A significant reason for debt problems can be the frequency that we are paid – either by salary or by benefits. For most of us the household bills we pay are monthly payments – be it rent or mortgage, council tax and utility bills, insurance policies, phone/TV contracts etc.
And when our income arrives monthly – then the sums are not so difficult to do. After the monthly payments, the amount remaining is all we have left for the month for housekeeping, fuel, social and 101 other things we need to get by – but the priority bills are sorted. But apart from non-leap year Februarys, there are more than 4 weeks in a month. And the day the income arrives will vary each month. We may receive £250 per week – but for a full calendar month this is more than £1000. In fact its £250 x 52 weeks divided by 12 months = £1083.33. Similarly receiving £1000 every 4 weeks equates to the same total per month.
It’s not difficult to see how budgeting problems arise. We may receive the £1083.33 on average – but it doesn’t feel like that. And when the income arrives on a different date in the month, it makes for organising the bill payments much more difficult. It involves setting funds aside or saving for the appropriate date. It’s a confusing picture and needs more careful planning.
For some, they have managed to agree with landlords and some service providers to pay weekly. For other this is simply not possible. Others ensure they have at least 2 separate bank accounts – and the amount needed each month for bills finds its way into a bills account. For those paid weekly, they may try and spread the bills across different dates in the month and/or designate a particular bill to be paid from a particular weeks pay. Still others try and work on a 4 week month and when there are 5 payments in a particular month – regard the 5th week as a bonus for savings or holidays.
There is of course no right or wrong way – but it does need careful thought and planning. There may be some benefit in receiving a weekly income (we can’t blow the whole months’ income in the early days of the month leaving us short for most of the month) – and I’m sure sometime somewhere will extol the virtues of being paid 4-weekly – but organising our finances so that the priority bills are paid and the cash flow actually works – inevitably requires more work and probably stricter discipline.