Most people know that living below your means — spending less than you make — is an important part of balancing the household budget. But, another great strategy is to live after your means: don’t spend money that isn’t already in your hands.

For example, suppose you are paid on the 1^st and 15^th of the month: do you pay the Hydro bill that you receive on the 10^th from your pay cheque on the 1^st, or the 15^th? Managing your money is much easier if you’re paying that bill from your paycheque on the 1^st (or, better yet, from the 15th of the month before!), because bills getting paid is not dependant on money that hasn’t arrived. You will have less stress, and your household budget will always show enough money to cover expenses.

Living after your means makes living below your means much easier, as you begin to think differently about money – maintaining your positive cash flow becomes motivation to spend less.

Jesse Mecham is the creator of “You Need a Budget” software that operates on this living after your means principle. In order to use the software most effectively, you need to have (or create) a cash buffer of one month’s worth of expenses. So, when you’re living your life in December, you’re spending money that was earned in November.

Living after your means is not the same thing as creating an emergency fund in the amount of several months worth of expenses — in an ideal world, you’re doing both of those things. You can follow the same process for developing your “budget buffer” as you would for your emergency fund: put away a specific amount for this purpose until you’ve hit your target goal (in this case, the amount of one month’s regular expenses, including contributions to savings, investments, emergency funds, etc.).

Living below your means, and living after your means are extremely effective ways to make your household finances work with a minimum of stress, regardless of what your household income is. In both cases, however, we often require a tune-up to our money mentality. People who have a history of overspending and/or credit card dependence often find cutting spending to a cash-only basis painful — at least psychologically. Like most habits that are more fun than good for us, it can be difficult to change, but it’s not impossible. Rethinking your budget to get one month ahead of yourself can be a similarly challenging change, but the rewards are significant: imagine never having to juggle bills or hope your car can run on fumes until payday. Imagine not having to use your credit card or payday loans to bridge the gap between paydays. Living after your means means money management without the daily/weekly/monthly stress of trying to live for 14 days on a 10 day paycheque.

How to get a month ahead: some ideas

1. if you’re already saving, it may be a simple matter of diverting some portion of your savings to create the buffer fund. Remember, all you need to do is get 1 month ahead on your expenses — don’t go increasing your budget to include a bunch of spending you aren’t already doing. If you do that, you’re setting yourself an impossible task.
2. Wait for tax time. If you’re expecting an income tax refund, use that as the basis for your buffer fund. Similarly, you could use cash received as bonuses or gifts.
3. If you’re not already saving, and you’re not expecting a windfall any time soon, you’re going to have to examine your budget for places that you can create a surplus that can be directed to this purpose. It doesn’t matter if it’s a large or small amount — the only difference is the time it will take you to reach the target goal.
   • try cutting costs by bringing your own lunch or coffee, driving less, turning your thermostat down a bit, doing laundry in cold water and/or hanging clothing to dry, or carpooling or public transit-ing to work

Remember, this is NOT an all or nothing proposition: on your journey to living after your means, you are still helping to alleviate your financial stresses — if you are only 1/2 a paycheque ahead, that’s still 7 days that you have buffered. Make it a challenge - see how many “days” you can add to your buffer each pay, until you’ve hit the month.

What are some of your strategies for building a buffer and living after your means?