How to Budget if You Get Paid Once a Month

1. Pay Bills and Set Aside Savings Early in the Month

If you’re paid monthly, it’s likely you’ll receive a paycheck around the first of the month. Set automatic bill payments for your monthly expenses, such as utilities, credit card bills, student loans and subscription services, to come out of your account near the start of the month too. If the bill isn’t due until the middle or end of the month, pay early; some companies will allow you to change your bill due dates if you request it.

This system can also work well with savings. Rather than waiting until the end of the month to save whatever is left over, decide on a goal amount—say, $100—to save per month for emergencies and set it aside right at the start. Automating those savings means you’ll have less to work with throughout the month, so set up bank account alerts to make sure you avoid an overdraft.

2. Boost Your Emergency Fund

Budgeting on a monthly paycheck means big expenses can lead to more stress than if you knew you could count on getting paid more frequently. That makes a sizable emergency fund crucial.

You can start an emergency fund by seeding it with a windfall, like a tax refund, stimulus check, work bonus or gift. No amount is too small to regularly add to the account; the more important element is consistency. Aim to save six months’ worth of essential expenses in the account, rather than the less conservative three months’ worth that experts may suggest. This will give you more flexibility to cover pricey car repairs, health care costs or other expenses without affecting the rest of your monthly budget.

3. Closely Track Your Expenses

Paying bills and saving for emergencies early in the month makes it necessary to have a plan for how you spend the rest of your money.

To start, look at your spending from the past one to three months across your checking account and credit cards. Set aside bills and savings, and split the rest of your expenses into categories like entertainment, groceries, takeout meals, personal care, debt payoff and more. Your bank or credit card company may already categorize your spending this way on your online account portal.

Do a gut check and identify if there are any areas that seem out of balance, or that surprised you. You can reduce expenses, like cutting back on takeout meals or canceling subscriptions you don’t use, in the next step. But knowing how you’ve been allocating your monthly funds is the only way to get closer to budgeting more effectively.

4. Set a Spending Plan

Develop a game plan for how to cover expenses beyond bills and savings, and how to have even more money to put toward debt payoff or your future goals.

There are multiple budgeting methods to try, and the best for you depends on the level of maintenance you’re willing to apply to the budget you choose. One relatively low-effort option is the 50/30/20 rule, which suggests splitting your after-tax paycheck into three categories: necessities (up to 50% of your income), non-essentials (up to 30% of income) and savings and debt repayment (20% or more). Other budgeting options include the zero-based budget and envelope budgeting.

To stick to a spending guideline, you may have to make some major changes. That could include cutting back on non-essentials or looking for ways to reduce the cost of necessities like car insurance or your cellphone bill. You can also make behavioral changes, like taking out cash each week and setting yourself a spending limit, or using a budgeting app.

5. Consider—Cautiously—How Credit Cards Can Help

Credit cards shouldn’t be considered a bridge to your next paycheck if you need more cash. That can be a quick way to go into debt beyond what you can manage. But used strategically, credit cards can help you keep track of expenses and give yourself some extra time to pay off everyday purchases. The key is to avoid carrying a balance from month to month.

Here’s how it works: A credit card generally comes with a grace period on purchases. That means you have 21 days from your statement closing date to your bill due date, and if you pay your bill within that time frame, you won’t be charged interest. For example, let’s say your statement closing date is June 30 and the bill is due July 21. You could make a purchase on June 5 and have until July 21 to pay it off interest-free—giving you time to get your next paycheck before paying your bill. You can also gather credit card rewards this way.

It’s crucial, however, to pay off your whole balance every month if you’re going to use this method. Otherwise, carrying a balance for even one month could lead to losing your interest-free grace period altogether.