Aligning Your Cashflow

Tons of people have been writing with questions similar to this on from EM:

I’m usually a really organized person but struggle with ways to get the cash flow organized well with the money coming in at different times. I’m paid bi-weekly and my husband is paid on the 15th and 30th of each month. When I look at the monthly numbers, we should have a surplus of cash but many of our expenses (childcare, RRSPs, life insurance, car payment etc) come out at the beginning of each month and I’m feeling like I’m out of sync. The mortgage payments are bi-weekly and align to my paydays. I try to “move” money mid-month to put it aside for 1st of the month bills but struggle with how much to move there vs. what to apply to our line of credit and when (owe about $20K there, have no other debt aside from our mortgage and car loan). Can you please recommend tools or systems which would help sort out my constant misalignment?

Sometimes people’s cash flow is out of alignment because of how often they are paid. Sometimes it’s because of when their bills hit their bank accounts for auto payment. Mostly it’s because people don’t take the time to sit down and plan when the money goes out based on when it comes in.

The first thing to do is to make a list of what you have to pay by date. If your mortgage comes out on the 5th, and that’s the first bill of the month, it goes at the top of your list. (This assumes you have enough income to cover all your bills. If you don’t, you’ll have to find a way to Make More Money.)

When you’re managing your bill payments remember that you can’t wait until the due date on the statement to pay your bills. While some companies have a grace period following a bill’s due date, if you try to pay on the due date using online banking, telephone banking, or bank machine, and the payment isn’t posted that day, you’ll be charged a late payment fee. Get in the habit of paying all your bills at least three days before the due date.

Now plot when those bills and the amounts you must pay on a “month at a glance” calendar. You can simply photocopy any month at a glance and use it as your template. There now, you can quickly see when the money needs to come out of your account.

Now put in your pay days. That’s when the money is coming in. Actually write on the calendar the amount that being deposited to your account.

If you get paid on the 30st of the month, that money will actually be used at the beginning of the next month. So people who are paid semi-monthly will pay half their bills from the 1st to the 14th with the money the deposited on the 30th, and the other half of their bills with the pay they got on the 15th.

If you get paid bi-weekly, there will be some months when you get paid 3 times instead of twice. You need to determine how many months of the year this happens, so you can allocate the “extra” paycheque appropriately. For your budget’s sake, you may have to live as if you only get two pay’s a month, and use the “extra” for boosting things like “home maintenance,” your “vacation fund,” “savings”… anything that doesn’t HAVE to be deducted monthly.

The trick is to pay only the bills for which you have money in the bank during any period. To that end you may actually have to call some of the companies you deal with and change your billing date. Yup, you can do this. It’s a pain, but a little effort now will make managing your cash flow a whole lot easier over the long term. Keep in mind that you’ll have to pay a pro-rated bill when you change your billing date, but after one month it’ll smooth out.

Okay, so back to your calendar. Look and see which bills can be paid from each paycheque, and whether any billing dates must be moved.  Allocate your pay to bills so that you not only cover everything, but have the money you need for things like groceries, gas and transportation, entertainment and whatever else comes out in “cash” including your debit card transactions. Go back to your original list and rate the “paid” date in beside the bill, so you have a quick at-a-glance list of when all your  bills will need to be paid.

One of the biggest benefits of having all your bills visible on a calendar and list is that you can track them as they come in. If for some reason a bill doesn’t arrive when it is supposed to, you’ll know the bill is missing, and can call and get your balance and make a payment before late fees and interest start to accumulate.

Doing this takes some time, but not as much as you might think. And finally having a system for when each bill will be paid will mean you’re not scrambling to find money so you don’t rack up interest and late fees. It’s definitely worth the effort.

BTW: Jessie in Calgary is interested in joining or starting a Gail Club. If you want to hook up with Jesise, email me at and I’ll send on your contact info.

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30 Responses to “Aligning Your Cashflow”

  1. Another good post, Gail! For years, I have been using this method to track money. I have a month at a glance calander for the full year, and write down (at the beginning of the year), all the for sures I know – paydays, mortgage payments, insurance payments (done monthly), government child benefits payments, money transfers to ING, etc. Every payday, I go online and make sure that the money was deposited, and then take my bills I have for that time period and pay them that day. Then, I allocate on my calendar what money I need for what and deduct it from my balance, such as cheques outstanding. I always write down how much has gone on my credit card, and any cheques I’ve written, so that nothing is a surprise. I find this system works well for me, and I always know where I stand with my money, and I never pay late fees. I sleep much better at night knowing that all my bills are paid, and where my money is.

  2. Where possible I have payments scheduled to coincide with payday. My husband was paid on the 15th and 30th for many years. I contacted our billers (phone, gas, cable etc) and asked that our payment due date be aligned with one of the paydays. They were always able to accomodate us – it made budgeting so easy.

  3. this is actually one of my goals for january! thanks for going into more detail about the subject.

  4. A method I use that has worked really well is to set up an Excel sheet for every pay. I list what must come out of that pay (recurring things like mortgage, hydro, phone, savings, car payment, and since I use my credit card like a debit card but with points, everything I’ve put on the credit card in that pay period.) That way, if my pay period covers the time when the car payment is due, I transfer the car payment or whatever into the automatic payment account, where it can sit until it automatically comes out. The excel sheet calculates for me what I’ve got “extra” after all the bills are paid and the savings is put away, and that “extra” goes to paying off our loan faster. My chequing account ends up at zero usually on payday, but everything is paid, there’s some put away, debt is being paid down faster, and I know I’m good until the next payday. I just started tracking every receipt, so I know at any given time exactly what is going on my credit card. This is actually helping me reign in the spending a bit, as I got a little too free with it over Christmas and had to cut back on “extra” debt payment this month to make sure the credit card got fully paid. I track all the spending on another Excel sheet which automatically adds up each of my categories. Can you tell I’m an Excel freak?? But it’s dug us out of a hole in the last year (along with jobs we both took on on the side) and it works out very well for my DH too. His paycheque is deposited in the joint account, I do my magic with the excel sheets and the payment account, and then I transfer his “extra” to his chequing so he has some mad money while knowing everything is taken care of.

  5. I actually use an Excel spreadsheet to keep track of this. Down the left hand side are all the days of the year. I then have a few columns where I can write in a description of an item and the amount going in or out of the account for that item. And finally the right hand side column keeps track of the balance in my chequing account as money moves in and out. I write in all my known bills/payments and paycheques and I set up simple addition and subtraction formulas to track the balance.

    Making sure there’s enough money in my account to cover my upcoming bills is as easy as checking to make sure there are no negative numbers in the right hand column – now and in the future.

    A nice feature is that it allows me to see what kind of culmulative impact making changes to my income or ouput has. For example, if I cancel my cable, I can see that there is $500 more in my account at the end of the year.

    I don’t know that I’ve explained it clearly enough but it’s been a great working document for me.

  6. Smart move, Money Minder.

  7. I just make sure there is enough money in the bank for our bills. Our rent comes out the beginning of every month. so i think of our rent money as our 0 in the bank. I think of any bill money that way.
    Ive manage to pay all our bills on time for the most part

  8. Aww Gail, thank you for this. I’ve felt a bit silly being 27 and still doing this every month (it’s something I started when I first got out of school). I tick down my little list. Rent on the first (check mark when I give the check to the building manager), utilities a few days after (check mark when I initiate the online transaction), etc. I even have two lines for the student loans I allow to be auto-deducted (don’t trust any other groups to do that) so I double check that the debits were made properly. Irregular bills like insurance, co-pays, etc. get noted alongside the list.

    It’s just a nice way to visually keep track of everything; and I only have a handful of recurring bills. I just can’t imaging not having a list every month but I’m the only one I know who handles it this way. So, thank you for letting me know I’m not the only one and that this isn’t a crutch, just a method!

  9. Great info Gail. I am new to your website today and am very excited. I have lots of books but rarely have a moment to sit and read. I too live in Calgary and would love to hook up with Jessie. Thanks

  10. avatar MoneyManager Says:
    January 20, 2009 at 12:45 pm

    I’ve been doing this for as far as I can remember. Recently, I found a notebook I had way back when I was in highschool that I used as my ‘passbook’.

    Now, I use an Excel sheet which have evolved over the years. In it listed the paydates, what bill comes out of what pay, how much we put away on savings – planned spending/EF/TFSA (all automatic deductions the date after paydate), how much we contribute to our RRSP (both before-tax and after-tax money). I know exactly how much $$ we have (its a joint account) at any given day.

    AND my DH is finally convinced that its so much better to save for something first than acquiring it by credit. Yey!

  11. I organize my payments and paydays using the Microsoft Outlook Calendar. It allows me to put each payment in and set the status to re-occur for whatever perameters I set. I can also print each month and post it on my fridge for easier visual. Once an item is paid, I simply delete the single occurance from the day which it falls. My husband and I are both paid bi-weekly but we are paid on opposite weeks – therefore receiving a pay every week. That certainly helps too.

  12. Perfect timing on this blog! I just started using your Budget Planner and we are in the same position as EM. At first I couldn’t figure out why we didn’t have as much money every month as the Budget Planner said we should have. I talked it over with my fiancee and he said to use the lowest amount received on most months as my net pay. Smart man. So, on those two months of every year when I receive a third paycheck, it’s like a bonus that we can count on. Our plan is to split the bonus money 50/50 between paying down our line of credit and our wedding savings account.

  13. Just a tip for those facing student loan payments: you CAN call them and ask them to change the date of your automatic payment.

    When they sent me the initial repayment documentation, I was dismayed to find that they deducted on the 1st of the month- same time as rent/mortgage, etc. was due. One relatively quick phone call later, and the payments are more spread out (rent/mortgage on the 1st, OSAP on the 15th)

  14. Big thank you, Gail!! This is so timely.
    The past 2 years my husband has been receiving bi-weekly paycheques and now starting this year, this January, they are moving to the 15th and 30th paycheques.
    Just when you get into a payment groove and there’s smooth sailing, now I feel I have to reinvent “our” wheel and scramble to make sure in April & Sept. of this year we’re covered for that lack of extra payment!

    Gail is always a step ahead!! 🙂

  15. Great post!

    I have recently asked all my creditors to change the date of payment to the 20th as I get paid monthly on the 18th/19th depending on the day that falls on.

    They were all very willing to accommodate me and I have found it alot easier to manage knowing that only their set payments were coming out on set days, rather than randomly throughout the month. In most cases I just emailed them with my account or reference number.

    I also asked my employer to automatically deduct my mortgage, rent (yes I pay both) and three lots of savings to different accounts, directly from my monthly pay so I don’t have to do that myself and don’t have to touch it.

    That way whatever is left is money I can spend with no worries about bills being unpaid and savings not being accrued.

    Has anyone else found it hard to ‘treat’ yourself now that you are in a saver frame of mind?

    I got a $50- gift certificate from work for Christmas and am so engrossed in not buying anything I don’t need I couldn’t find ANYTHING that I wanted!!!

    I am now thinking I will give the certificate to my Mother for Mothers Day as she is just awesome!!!


  16. avatar Stephanie H. Says:
    January 20, 2009 at 8:32 pm

    I have an account I used just for my monthly bills. I move money every paycheck to this account. The account has about 1.5 money transfers on average to provide a buffer for holidays or weekends. This also means I don’t need to worry exactly which day bills land on each month. I transfer the same amount each paycheck which also helps me build a buffer in case I have an expensive utility bill on occassion. The remainder in my main account is what I use for the rest of life.

  17. ~ Sarah…yes I agree, definitely…I find it so difficult to treat myself nowadays. I had no problems treating myself over a yr ago. lol
    Now I just want to be practical with my money, and its very hard to enjoy spending money now. I need to find a balance between being such a cautious spender/ and saver, and just enjoying my money and being able to treat myself once in a while. 🙂

  18. avatar an ostrich named sam Says:
    January 21, 2009 at 5:15 am

    Student loans will allow to you to switch to bi weekly or weekly payments. I switched to bi-weekly just shortly after it was allowed and by bumping up the payment by a bit, I’ve been paying close to an extra 1000 on year on the principle.

  19. Fiona, I have the same problem and I want to find a balance too!

  20. This is great information! I find Gail’s Interactive Budget Worksheet good for this because you list every payment you have to make during the month to find out how much you need to put away. In additon, once I have used Gail’s sheet, I transfer the information to an excel spreadsheet with all the dates when payments come out and dates when the money goes in and it gives me a declining balance so I know when the payments are due, and when the income goes in and how much money I need in my bank account at any one time to get to the end of the month (this controls my discretionary spending). The columns I have for my spreadsheet are Date, Particulars/Reconciled/Actuals (Debit)/Commitment/Credit/Balance.There are times when I have to make adjustments so when the budget is made the amounts go into the commitment column and when the bill is paid, the amount is moved from the commitment column to the Actuals column. I have to admit that I check my bank balance pretty well every morning and reconcile it to my spreadsheet. I have a Tim Horton’s in the one building I work in and it used to be that I might buy a donut or buy a coffee for someone else. I am a cashier at a grocery store and I don’t need to buy anything and so I am not tempted. It is amazing how easy it is to have money in your hand to buy one thing and you end up buying another thing that you really didn’t plan on. The little things you do over time really add up.

  21. Oops! I meant to say that my $50 budget for coffee/beverages per month has dwindled to $0 because I don’t go to Tim Horton’s anymore. Of course, I do buy coffee out of my household grocery budget but the extra cost of making the coffee at home is minimal.

  22. avatar Catherine Says:
    January 21, 2009 at 1:59 pm

    @Sarah ~ I hear you. I find it very difficult to spend any $$ on things not ‘needed’. I, too, received through work 2 gift certificates – one for $50.00 for groceries and another from Chapters for $25.00 which I regifted to our daughter at Christmas…..
    I think Gail has created a money miser in me and I’ve done a 180! I think and rethink everything.

  23. Catherine,

    It can be quite frustrating wandering around the shops, picking things up and then I ask myself ‘Do I actually need this’ and the answer is usually no!

    I gave Mum the gift certificate and she loved it and has bought herself a special swimming costume which are only available in that store and are very expensive as they are masectomy costumes (Mum has had breast cancer twice).

    Can you believe they charge $120- AUD for a swimming costume and then she has to pay $500- AUD for fake ‘breasts’ to put inside it….


  24. avatar Catherine Says:
    January 22, 2009 at 2:41 pm

    Glad your Mom liked the gift certificate; I’m so sorry to hear about her health issues and I wish her better health. So neat that you could brighten her day.
    Everything is so expensive in the grand scheme of things – my daughter’s bras are $120.00 each…..

  25. […] Aligning Your Cashflow « […]

  26. […] 3. Automate as much of your bill paying as you can. Many of my bills come as e-bills. Many more are auto deductions from my account. Each month, at the beginning of the month, I subtract those amounts from my spending journal so the money’s already “gone” and I can’t spend it on other stuff. (Since I’m paid monthly, this works for me. If you’re paid more often, you should read this blog. […]

  27. I’ve only recently found Gail and all of her awesome tips/tricks/tools and the fans with their tips / tricks & tools and have been spending a fair bit of time recently working out a livable budget and figuring out exactly where my money has gone and where it’s going to go now. Here are a few things that I’ve learned and implemented.

    Because I do 99% of my banking with my debit card or automatic payments it was easy enough for me to download from the banks website all of my transactions for 2010. After entering everything onto an excel spreadsheet and assigning a category to every single item for 2010 I found out exactly where my money had gone and then I was able to come up with a much more realistic and beneficial amount for each category I had been spending my money on and for a few new categories that I should be spending my money on and I came up with a total for the year/each month and each pay period and now each pay period I transfer to another new account only the amount for the ‘cash’ expenses and the non-bill expenses like gas for the car and this pays groceries etc. All other money in my main account has now been ‘spent’ paying everything else on the budget for that pay period so I’m “paying” all expenses bi-weekly when I get paid even if the actual money only comes out of the account once a month.

    Any payments that could be set up as an automatic payment have been such as my rent, utilities, insurance etc. These payments come out of my account about 3 minutes after my paycheque has been direct deposited into my account (its just how I have the payments set up) So when I get up in the morning on payday to check my account the majority of my bills have already been paid. No costs for stamps, envelopes and no chance of missed payments because a bill got lost in the mail, no late payment fees or added interest either.

    Also I know before the hard copy or the e-bill of my utilities comes in exactly how much my recurring payments are because where I live our utilities (gas, hydro) can be put on something called budget billing. What this means is the utility company takes the total costs for the year and averages it out over the year so you pay the same amount every month regardless and it’s adjusted yearly if need be. It takes a bit of getting used to paying a gas bill for heating in the summer but it makes the budgeting so much easier.

    Once a week I enter all the line items from my bank statment (online) onto my spreadsheet to make sure I havent missed anything, or overspent on any category.

    The biggest challenge was figuring out all of the possible expenses and allocating part of the budget to them. For example I’ve alloted a small amount for prescriptions each pay. We have drug coverage through our insurance at work but we still have to pay a portion. Thankfully I havent had to have a prescription filled in a couple years but just in case now that money will be there.

    Thanks again to Gail and all her fans for their wonderful and inspiring information and posts!

  28. I have been watching Gail for a few years now. At this point I dont always get new information that will help me since I already follow most of it. (Have not tried the jars)

    In regards to the posting I currently use an excel spreadsheet that I found as a template for all of our bills and deductions out of that account. I know when money is coming out and in and how much we have available. I find it helps a lot.
    I have also found Quicken really helps in keeping track of everything including cash and will also give reports and let you know where your money is going.
    I get paid bi-weekly and my bf is paid twice a month.
    I pay our bills when we receive them, since I have the non-automatic payments on the date when they are due and I pay them earlier in the month if possible I will erase the amount when due but leave the bill reminder and input the amount on the date paid with “Bill Payed” to keep it current.

    Since we are just starting out we have not worked our way into building a buffer into the account (getting there though). Our account helps us save by transfering our ‘change’ up to an even $5.00 from our debits into a savings account. Since its a small amount at a time, we do not notice the debits almost $400 this year alone.

    With my company I have money deposited into 3 accounts. My ‘Bills’ account which is joint with my bf and into each of our personal checking accounts to cover loans and rrsp deductions we dont have set up in our joint account. The money that goes into the other accounts I consider not even receiving since the deductions are automatic. The money that is deposited into the Bills account is used for bills, spending (transfer to separate account) and savings.

    We are slowly building a buffer/float into each account and have saved quite a bit for a rainy day. A major goal is to pay off all of our debt (mostly accumulated from school). To do this we use the per diem, expenses and half of my OT from my job directly towards debt in addition to the regular payments made.

    My goal is to be a month ahead with having the money in our account for bills which will elminate the need for constant vigilance and allow for a month review.

    We are on our way to being debt free and living mostly responsible with our money in the bank. (Dinners out on occasion with friends since we stay home most of the time) and trips home so my mother in law will not hate me for taking her son away from her (I moved him across country for my job).

    Its always a work in progress but there is light at the end of the tunnel

  29. Lindsay I do the exact same thing. Our pay arrives every other week, and virtually everything we spend is predictable long into the future. When you’ve cut out all the nonsense spending and stick to the basics, there really aren’t many surprises. Mortgage every other Monday deducted automatically, property taxes, insurance and internet on the 1st, phone, cell and hydro on fixed days also. It’s not a surprise so I just plan out the ENTIRE YEAR at once with a heading to break the long list into weeks. Each week contains the standard amount for gas and groceries, plus on the designated weeks our incoming salary, and outgoing morgage or utility. I know the dog goes to the vet every May so I add a row with $250 for that in the first week of May. I add a row with $200 for gardening supplies in the third week of May since I know we’ll plant things on the long weekend. I include a row with money to cover each child’s BD in the appropriate week of the year. I also put double the gas money in for the weeks of Christmas, Easter etc for times I know we’ll be on the road visiting relatives. These really aren’t surprises, and certainly not emergencies. I keep a list of these weird annual charges I might forget to include when I plan out the year.
    Except for mortgage, property taxes and hydro EVERYTHING goes to the VISA. This way I never have to keep track of which day to send the payment and nothing is ever paid late. I pay off the VISA every Friday (yes weekly) so as long as I keep on top of that, there will never be a late fee or interest paid. I also earn Aeroplan miles for all our groceries, gas, internet, phone, cell, insurance etc. (hello Europe again this summer). I even have my Tim Horton’s card autoreloading from the VISA when it drops below $5. I don’t keep track of when the extra pay months happen. I don’t think of my spending plan in one month chunks, but an endless long list into the future showing a steady flow of cash in and out. After the VISA is cleared every Friday, I assess the remaining balance and anything over the ~$1000 level is considered “excess”. I enter the amount I’m considering transferring out and scroll down the spreadsheet to make sure it won’t cause me to be short in the future (short being under $1000 and cause me to incur bank fees). In a month when there’s an extra pay there will likely just be a larger than normal excess that Friday. The excess goes to either RRSPs, TFSAs or an extra mortgage payment. Because virtually everything we spend goes on the VISA and I keep it cleared weekly, if we did have a tight week for example, all the 1st of the month bills came in, the biweekly mortgage payment was due and it wasn’t a pay week, then I’d just wait a week to pay the VISA. It’s not really due anyway so waiting an extra week just allows me to smooth out the cash flow.
    Personally I don’t get the calendar method. I agree it would help you collect all your information about when everything is due and when you are paid, but somewhere you still need to do the calculations to make sure there is enough in the account at all times, so I’d wind up on a spreadsheet anyway.
    My very long list of dates, descriptions and a running balance in Excel goes back to 2005. At some point I’ll reach the maximum number of rows for one file but at this point my planning for December 2012 is on row 6953.
    All hail Excel!

  30. I have been working hard on my family budget and have the issue of one paycheck 15th and last and the other one bi-weekly….as the bi- weekly cheques are smaller, i was able to apportion all of the 15th and last cheques to mortgage, utilities, savings etc and the bi-weekly cheques for the cash for gas, food and personal allowance. This means we don’t touch the “monthly” money and the cash has to last for the full two weeks. I know not everyone is able to work this method – the bi-weekly cheques are substantially less than the monthly income in our case – but one of the lessons I have learned from watching Gail’s shows over the years is that there is not one solution to the problem – just the one that works for your situation. Using this method, i have found a way to pay off all our consumer debt in less than a year while still having enough spending money to enjoy a few luxuries like the occosional Tim Hortons coffee!

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