Build Security by Aging Your Money
We can’t change the fact that you don’t know exactly when or how much money you'll bring in this month, but we can teach you to be in total control of the money you do have right now, and stress a little less about it. This eight-part series will teach you exactly how to budget successfully and make your money stretch, unpredictable income and all.
On this, our seventh round of convincing you that you and your unpredictable income need a budget, we’re going to talk about aging your money.
Unlike so many other areas of life, when it comes to your money, the older, the better (no, Instagram, I don't need eye cream recommendations yet).
What we mean is, you want to extend the time between when you receive money and when you spend it. And although you might not have thought about it quite like this before, it makes a lot of sense.
For example, if money comes in next week and you still have money left from two weeks ago, it’s going to feel great. You have breathing room. You aren’t juggling the timing of your bills. You can look toward the future. You can make better decisions. You aren’t always one step behind.
Here are three significant benefits to aging your money:
Less Mental Overhead
You know that feeling of mental math? Like, “Well, I think I can cover this bill, once that next check comes in, and then I might be a couple days late on rent, but I think my landlord will let it slide this time….” Juggling your bills and deferring due dates, and praying that checks clear before your online bill pay goes through—it’s a big headache. It’s a big drain on time and energy.
But when you age your money, you don’t have to worry about timing or due dates for a second. You just get a bill and then you pay it. Rinse and repeat.
Aging your money is a process that starts little by little. When money comes in, and you are assigning every dollar a job, try to give some dollars (even if it is just a few at first!) a job for next month. Aging your money is an investment. So that last $50, you could use it eating out, sure. Or you could put it toward next month’s rent.
Simply put, cash is king. If you have access to more available cash at any given time, you are in a more comfortable position.
When you have baby money (as opposed to old money, see what we did there?), as soon as you get it, you have to spend it, or even worse, you might be spending it before it’s even yours. So when anything unexpected happens—your income totally dries up, a check doesn't land when you thought it would, or you have additional expenses—you are left scrambling. At best. At worst, you miss a rent payment or start charging up your card.
When your money is old, you are paying rent, and buying groceries, with money that's been hanging around your account for a bit. If your grocery bill is higher than usual, you need to express order a prescription, or you have to get your car repaired, it won’t feel like an emergency. You have a cushion, which gives you time to figure out the best way to recover that income, cover your bills, and be solid for the future. That’s security.
So, How Old Should Your Money Be?
For someone with regular, predictable income, thirty days is a good benchmark. But with unpredictable income, you might just be trying to make it to next week! Start wherever you can and build up from there. It takes time (months! maybe even years!). Give yourself grace, you're not going to have old money right away.
Commit to aging your money now, however small your first step, and you'll be building up an incredibly powerful habit that will serve you well in the days, months, and years to come.
Last one! Part 8: You Can Take Control!