This method is to help you learn how not to live from paycheck to paycheck. The beautiful part is that it will make you feel more secure and confident. You should only have set this up once and only make minor adjustments to reflect your lifestyle as life goes on.
In order to make this possible you need to know your total monthly expenses and have the ability to save a month’s worth of money, also know as your Aged Money. Keep in mind your Aged Money is different that an Emergency Fund.
Real Life Scenario
As of January 2019 Kennedy’s total expenses are $8,651.08.
Kennedy is a Freelancer, when and how much he gets paid is generally a pretty big variable. If you look at his expenses, they are due randomly throughout the month. This means he has to constantly be on top of when he is getting paid and where it should start going… every month.
Normally he has to call collectors to let them know he will be paying his bills late as he waits on a paycheck. Or he will get emails from recurring expenses letting him know the card on file was declined. All this extra stress is not necessary. We are not even talking about an unexpected expenses that might come up and you know those always do.
Instead of that stress, if you Aged your Money when a bill arrives you pay it with the money you set aside last month. In this example Kennedy’s expenses are $8,651 so he should set aside $8,651 this month to pay for next month’s expenses. This way you are no longer waisting time trying time your bills to specific paychecks. This is the goal with Aged Money.