Smarter Budgeting Tips with On-Demand Pay

September 16th, 2022

From detailed spreadsheets to psychological tricks, budgeting tips can range from strict to impossible to follow.

Budgeting is definitely not one size fits all. Everyone, depending on factors from their pay cycle to personality, has an individual method that makes them most comfortable. But a new workplace perk, on-demand pay, is rewriting budgeting for a new generation of workers.

How does on-demand pay work?

You can access wage advances at the end of each shift, whenever you need. Your earnings update when you clock out, and your money is available to use as you see fit. Hang tight until the next official payday, or transfer a portion of your earnings into your Clair Spending Account when you need it, which you can spend using your Clair Debit Mastercard®. 

How can budgeting with on-demand pay improve your financial wellness? 

Some of us hear ‘budget,’ and it sends us running for the hills—we immediately envision severe cutbacks, stringent rules, and rations on fun. 

But in reality, budgeting can be freeing and can help you gain control over your finances. Here’s how on-demand pay can strengthen top budgeting methods. 

Name your own payday

With on-demand pay, you set your own payday: you’re not tethered to your employer’s pay cycle. 

Because you can get fee-free access to part of your next paycheck, you’re in charge of when and how you’re paid. 

On-demand pay is also a helpful tool for those working several jobs or inconsistent hours. Because on-demand pay allows you to access a portion of your pay before payday, you can get paid when you need it most.

How on-demand pay can help you pay your bills on time

For most of us, our bills aren’t due at convenient times of the month. The wait for the next paycheck can feel exhausting, sometimes forcing us to incur late fees on bills or resort to borrowing money from high interest payday lenders.

Instant access to your earned wages before payday can save the day. With on-demand pay, you can advance money you’ve already earned to pay bills on time, or take on more shifts and instantly access those funds.

Start by recording how much you need to spend on bills and savings each week. When your earned wages become available, advance what you need to your Clair Spending Account. When payday comes around, transfer what you don't need to your Clair Savings Account to start growing your emergency fund. 

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Use a budgeting formula like the 50/30/20 rule

One of the most common budgeting models is the 50/30/20 rule. The premise? Split your paycheck into three buckets: 50% for needs, 30% for wants, and 20% for savings (an account that comes free with Clair!) 

The fewer categories you need to painstakingly track, the easier it can be to keep an eye on your funds. See how you can crunch the numbers on a $2,000 (after tax) monthly budget: 

50% for needs ($1,000) covers:

  • Rent

  • Car payment

  • Transportation to/from work (gas, public transportation)

  • Groceries

  • Home utilities

  • Insurance

  • Student loan payments

  • Credit card debts

30% for wants ($600) covers:

  • Dining

  • Entertainment (hello, more spa days and live music!)

  • Streaming services (although some might slot this under needs!)

  • Hobbies

  • Travel

  • Home decor

  • Rideshares

20% for savings ($400) covers:

  • Emergency savings fund

  • Investments

  • Retirement contributions

  • Optional: Additional payments on loans or debts

Feel free to find the mix that works for you. For example, if you share household expenses with a friend, partner, or family member, you may be able to slide even more from the needs category into the savings bucket. Just make sure you don’t outspend your emergency fund!

How to use the 50/30/20 rule with on-demand pay

Many financial experts suggest opening several checking accounts to set aside for different purposes. For example, one account could be used to pay recurring bills, while another could be used for leisure expenses.

Since Clair comes with a free Savings Account, you can set up recurring transfers from your spending to savings to allow you to reserve 20% of your paycheck for a rainy day. You can then use your 50% needs allocation in your Clair Spending Account to pay for bills and other necessary expenses, and leave the rest for leisure spending or for cashing out fee-free at 40,000+ ATMs with your Clair Debit Mastercard®.

Other helpful tips to budget your money

In addition to methodical budgeting, adding a few fun brain hacks to the mix can prove extra effective: 

  • Play budgeting brain games: For some folks, calling an account something other than ‘savings’ or ‘checking’ is just the psychological trick needed to save more. Mentally tag your Clair account with something like ‘wedding fund’ or ‘Bali bash’ to help you stay motivated!

  • Literally ‘sock away’ money: Withdraw a portion of your paycheck as cash. Put it into an envelope or sock with a pre-determined purpose. Perhaps it’s saving up for a new laptop or investing in equipment to jumpstart your side hustle. 

  • Use your Clair Spending and Savings Accounts: With complimentary Spending and Savings Accounts which allow for free transfers between them, you can budget some of your money into your Spending Account and some into Savings, and wait until payday to get the rest of the money that you don't need right now.

Budgets help you guide your money to the right places instead of having to stress over how to pay bills at the end of the month. By using on-demand pay as one of your budgeting tools, you can gain new control over your finances to save more responsibly and have more money to spend on the things you enjoy. 

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About the Author

Hope Chen

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