None of what follows is clever. There's no secret product, no hack, no app that does it for you. It's the stuff everyone assumes everyone else is already doing. And yet, every time I talk money with oppos, I find out most of them aren't.
So here it is: what I do every payday, and the habits that sit around it. Take what works for you and leave the rest.
Give Your Money Somewhere to Live
If your wages, your bills and your beer money all live in one current account, you'll never really know what you've got. A balance of £1,200 looks like £1,200 to spend, even when £900 of it is already promised to your landlord, your phone contract and your car insurance.
The fix is simple: separate accounts for separate jobs.
- A bills account. This is where my salary lands, and where all my direct debits and standing orders come out. It can be a joint account if you share bills with a partner, or just a second current account in your own name. Either way, it's not for spending.
- A spending account. Food, fuel, nights out, the random stuff. Whatever's in here is genuinely yours to spend.
- Savings and investments. Money that's working for you and not sitting where you can tap it on a card.
Know Exactly What Your Bills Cost
Most people have a rough idea of what goes out each month. Rough isn't good enough. I keep a spreadsheet listing every regular payment and direct debit I have: rent or mortgage, utilities, phone, insurance, subscriptions, the lot, along with how much each one is and when it comes out.
The total at the bottom is the number that matters. That's what has to stay in the bills account every month so everything can be taken automatically when it's due. No surprises, no bounced payments, no last-minute transfers.
It also works for things you don't pay monthly. Car insurance renewal, MOT, Christmas: divide the yearly cost by 12, add it to the spreadsheet as a monthly line, and set that amount aside each month. When the bill turns up, the money's already sitting there.
Line Your Bills Up With Payday
We're all paid on the last working day of the month. So I try to set as many of my bills as possible to come out at the start of the month, ideally the 1st.
That way the money comes in, the bills go out a day or two later, and the rest of the month is clear. You're not watching a direct debit on the 23rd and wondering whether there's enough left to cover it. Most providers will let you change your payment date if you ask; it's usually a two-minute job online or on the phone.
It's also worth keeping a small buffer in the bills account on top of your spreadsheet total. Bills creep up, an annual price rise sneaks in, and a bit of slack means one bigger-than-expected payment doesn't bounce.
My Payday Routine
This is genuinely what I do, in this order, as soon as I've been paid:
- Salary lands in my bills account.
- I open my calculator and my spreadsheet and take the spreadsheet total off my pay. What's left is what I've actually got to work with this month.
- I pay my credit card. Sometimes that's just the minimum, sometimes it's a custom amount, depending on what I'm aiming for that month and what else needs the money.
- Once the essentials are covered, I top up my spending account to around £700. That covers my food, fuel, entertainment and general spending for the month.
- Everything left goes straight into savings and investments.
That's it. Ten minutes, once a month, and every pound has a job before I've had the chance to spend it.
A word on that £700. It's what works for me, not a target. Your number depends on where you live, whether you're in the mess or paying your own food bills, whether you've got a family to feed and how far you drive. Work out your own and stick to it. If you struggle to make it last, try splitting it weekly. £700 a month is roughly £160 a week, and it's a lot easier to see you're running low on a Wednesday than on the 20th.
Don't Wait Until the End of the Month to Save
I know plenty of people who spend through the month and then move whatever's left into savings. I don't, and I'd encourage you not to either.
In my experience, one of two things happens. Either the money's sitting there all month and you find a reason to spend it, or you get to the end of the month and just don't get round to moving it. Either way, it doesn't get saved.
Save first, at the start of the month, and live on what's left. Whatever you don't spend from your spending money just makes next month's top-up smaller, and the difference goes into savings anyway.
Pay Off Debt in the Right Order
Credit cards, loans, money you owe friends and family: anything that isn't already on a direct debit needs paying as part of the payday routine, not when you remember.
Always cover every minimum payment first. Missing one costs you in fees and dents your credit score. Then, if you've got spare money to overpay, put it on the debt with the highest interest rate first. That's the one costing you the most each month. If you're paying interest on a credit card at all, have a read of The 0% Shuffle. Paying a high rate on a loan or store finance? Borrowing Without the Bite covers moving it somewhere cheaper.
And don't forget the debts to mates and family. They won't charge you interest, but they're often the ones that cost you the most in other ways.
Have a Plan for Emergencies
Before the "remainder" starts going into investments, you need a plan for when something goes wrong: the car dies, the boiler packs in, you need to get home in a hurry.
Personally, I keep enough available credit on my cards to cover an emergency. That works for me because my credit limits are big enough to absorb a genuine emergency, and I'm confident I can clear it quickly. Not everyone is in that position, and an emergency on a card you can't clear just turns into expensive debt.
If that's you, or you're not sure, the safer move is an emergency fund: cash in an easy-access savings account, ideally enough to cover three to six months of your essentials. Shop Around for Your Savings covers finding the best rate for it. Build it before you start investing. Investments go up and down, and you don't want to be forced to sell at a bad time because the car needs a new clutch. Once it's built, leave it alone. It's not a holiday fund. For what to do once you're past that point, The Long March covers getting started with investing.
Check Your Payslip. Every Month.
This is the one almost nobody does, and it's the one that can cost you the most.
JPA gets things wrong. Allowances that should have started after an assignment don't. Ones that should have stopped carry on, and you'll be asked to pay them back later. Tax codes go wrong. Accommodation charges don't change when your circumstances do.
Spend five minutes each month looking at your payslip properly. Compare it with last month's and ask yourself why anything has changed. If something looks off, raise it with your unit HR straight away. Sorting out one month's error is easy. Sorting out eighteen months of it, in either direction, is a headache nobody needs.
When You Get a Pay Rise, Pretend You Didn't
The annual pay award usually lands a few months after it's due and gets backdated to 1 April. That means a nice lump sum of back pay, followed by a bigger payslip every month after. This year's award was 3.6%: here's what it means for your payslip.
The common sense move is to treat the back pay as savings, not a windfall, and to put most of the monthly increase towards savings too. Do it straight away, before you get used to the extra. If you've never had it in your spending account, you'll never miss it. Leave it a few months and it'll quietly disappear into a slightly nicer lifestyle.
Sea Time and Deployments Are a Gift
When you're away, your spending drops right off. No fuel, fewer nights out, food mostly sorted, and depending on the deployment you may be getting allowances like Longer Separation Allowance on top.
It's the easiest time there is to put serious money away, and the easiest time there is to blow it all on the first run ashore or a big purchase the week you get home. Before you go, set up a standing order so the money goes into savings automatically while you're away. Then decide on purpose what you're going to spend when you're back, rather than letting it happen to you. Before you go, run through the Pre-Deployment Finance Checklist in the Armoury.
Audit Your Direct Debits Once a Year
Pick a date, maybe when you update your spreadsheet after the pay award, and go through every direct debit and subscription you've got. The streaming service you forgot about. The gym you haven't been to since your last assignment. The app that quietly went from £4.99 to £7.99.
Cancel what you don't use. While you're at it, check whether any of your contracts are up for renewal. Insurance, broadband and phone contracts almost always cost more if you just let them roll over. For what to check when your insurance renews, see Covered or Kidding Yourself?.
The Bottom Line
None of this is complicated. Separate accounts. A spreadsheet. Bills on the 1st. Pay the essentials, give yourself spending money, save the rest, and do it all on payday rather than hoping there's something left at the end. Check your payslip, bank your pay rises, and make the most of time away.
Common sense, really. It's just not that common.