Skip to Content

7 Step Payday Routine for Living Below Your Means

If you are counting the days until payday at the end of every month then this simple payday routine can help. 

Starting off the month with a clear budget and a plan for how you will allocate every penny of your salary can help you avoid debt, save more and stress less. 

Budgeting routine for payday

This simple seven step payday routine is the perfect way to take control of your spending and stay on track to achieve your savings goals. 

Want an easy way to help keep track of your finances? Get my FREE monthly budgeting bundle.

What to do when you get paid 

Here’s a step by step guide to what to do every time your salary lands in your bank account. 

1. Review spending from last month 

First of all it’s good to check in with how things went last month. Did you end up in your overdraft? Did you spend more than expected on something?

You can use the information and lessons learned from last month to help you make key decisions for this month. 

If you did overspend on groceries, for example, then you can look in detail at what it was you were buying and see if there are ways to save on your food shop this month. 

Switching to cheaper cuts of meat, meal planning, bulking out meals with beans and pulses, cooking in bulk and avowing takeaways are all ways you can cut back on your food spending. 

2. Look at your monthly bills and expenses 

Now that you have assessed last month, you can start to plan for this month’s budget. 

First of all you need to take a look at your monthly bills – these are the fixed bills that will come out of your account either by direct debit or that you will have to pay this month. 

They may include your mortgage or rent, energy bill, water bill, mobile phone bill, and any childcare costs you incur on a monthly basis. 

Next up you need to look at your expenses, which are likely to vary. These are the thing that do not come out of your account in one lump sum, such as groceries, fuel, days out and clothes. 

Your expenses will be more of an estimate, but by looking back at last month you can get a fairly good idea of what these may be.

Add all of this up and that then tells you how much you have left for the rest of the month. 

If you have nothing left for savings or may be overdrawn after these bills and expenses have been paid, or even if it’s very tight, now is the time to review ways to cut back. 

3. Consider ways to cut back 

Even if you are doing well financially and have plenty of money left after your bills and expenses, it is still worth considering ways to trim your spending. 

A key habit of wealthy people is that they are always looking after every penny, and so will look to make savings, even where they do not actually need to. This is how they increase their wealth so successfully. 

So consider how you can save on your fixed bills. This may mean cancelling subscriptions to streaming services like Netflix, or looking for a better deal on your mobile phone bill. You could try contacting your providers and haggling for a better deal, which is what I did when I was looking to cut our Sky TV bill. 

Then look at your variable expenses and consider how you can cut back here. Could you buy secondhand clothes instead of brand new, for example?

4. Identify potential one-off costs

In order to avoid debt it’s important to consider any expenses that may come up in the month as a one-off. 

This could be a car repair or replacing your child’s school shoes.

5. Allow yourself some fun money 

Now for the good part, the money you have for spending on wants, rather than just needs. 

Many people assume a frugal budget has no room for fun spending, but that’s not the case. 

Frugal living is more about intentional spending, where you are focused on being able to fund the stuff you really love, without wasting money. 

For some people getting their nails done every month may be frivolous, but for others this is an important part of self care for them. Even if it is not technically a need. 

So figure out what you can afford to place into your fun money budget, and what things you may like to do with that money in the month. 

There’s a balance to be struck between doing what you love and ensuring you do not overspend. 

6. Review savings 

Now you need to take a look at your savings, reviewing where you are, where you want to be and what you need to be doing to be on track. 

I save for four key things: 

  • Annual expenses, such as holidays and Christmas
  • Rainy day emergency fund
  • Big picture goals, such as our next house move
  • Pension 

As a good starting point it’s nice to have one month of your bills and expenses saved in an emergency fund. As much as it can feel amazing to shop and buy something brand new, it feels 10 times worse to have an unexpected cost and have no safety net to catch you.

Savings shouldn’t be what comes out of the end of the month if you have anything left. It should form part of what you pay right after you receive your monthly salary

One way I’ve found keeps me motivated is having the apps on my phone for all my savings accounts, and I have a new one where I am paying in weekly. It’s kind of addictive checking in to see how my savings are growing, a much nicer feeling than seeing I am overdrawn because I overspent. 

It’s good to check in every month and see how things are going, and it keeps you motivated to do more. 


All of this is made much easier, and ultimately will help you grow your wealth, if you have multiple accounts. Separate your spending, saving and emergency fund into separate pots. You may have multiple savings accounts – for example an investment account and an ISA.

7. Consider long term goals 

It’s smart to take time to consider what your longer term goals are. You can help yourself reach them by breaking down the steps to get there into easier chunks. 

So for example if you want to save enough for your next big house move then you won’t manage to do that in just one month. You’ll need to divide it out across a longer period. 

Meeting longer term personal finance goals is also about more than just cutting your budget until you are spending nothing at all. It’s also about how you might increase your income to meet your goals. 

This could be through a pay rise at work or starting a side hustle. Side hustles have generated thousands of pounds for me in the last few years, and if you pick one that is in a field you feel passionate about it can be a lot of fun too. 

Final thoughts 

This 7 step process should get you on the right path with your finances! 

When going through this process it can be useful to keep in mind that you should budget for who you are, rather than who you want to be. 

What I mean by this is that in the moment when you sit down to budget you may feel really motivated and commit to a whole bunch of slashes to spending. It’s easy to do that when you are sat in front of your computer or phone. 

But who you are in that moment, isn’t who you are going to be every day. You’re also someone who maybe loves to get their nails done or enjoys going out with friends. 

If you do not leave room in your budget for the stuff you really love and the stuff you do every month, then your budget will fail. 

So be realistic, and you are much more likely to succeed. 

You may also like these tips for saving money on a tight budget and these frugal living tips.

Payday routine