Beware the December pay trap!

Floss

I run 2 bank accounts which avoids the problem. The Nationwide one that my salary goes into has all my DDs, savings & pension contribution going out of it & it also feeds my Monzo, which I use for pots & day-to-day spending. 

kimwp

EssexHebridean said:

kimwp said:

I'm curious - why is it an issue to get paid early? As in what are the practical steps that mean people then have a lean January?

Because in some cases the money comes in anything up to two weeks early - and at a time when often financially things are a stretch of a good solid budget isn't in place. So the food shopping for Christmas and New year for example - gets done using the next month's pay, and some extras make their way into the trolley because "we can afford it!". Extra presents get bought because the bank account looks healthy for the time of the month - there is a perception that you have more money than in fact you do. With all the excitement of the festive season, it's very easy for people to forget that there are still the usual bills to pay in January.

Then the 2nd of January comes around and all the DDs flow out, and suddenly there is a negative figure, and still a month's food to buy, and the rest of the bills...

The thread was started some years ago after many years of seeing folk arrive here in January in a panic because they cannot make ends meet. To those of us who've been here for a while and "done the thing" - it's a very obvious message, but it comes down to being one of those things that if you don't budget, it can be an easy trap to fall in to.

Thanks EH, so it could be  people forgetting that the money needs to stretch to the end of January and thinking "it'll be alright" because of a distorted perception of having more than normal or just a spend and hope attitude. I was pondering if it was people spending based on the amount in their bank accounts, and maybe that was why it worked to move the money out and back in again. I think if I was the type to spend because I can afford it, I don't think moving the money away would help - I'd still know I had it.

MattMattMattUK

It is a weird one, as a business owner we always pay staff on the second to last working day of the month, Faster Payments, so they get them the same day and that would mean an extra day to sort things out if there are any issues. No staff have ever asked to be paid early. Directors PAYE and Director's Loans get paid on the last working day of the month, both are legally structured so that there is no entitlement to them at all so if they were not paid or were paid late it would not matter. In one of my businesses there is a director is a car crash financially, always requests to be paid early (sometimes starting around 20th of the month), in December he always wants to be paid around the 15th etc. and these requests/demands are always refused, but he cannot get his head around budgeting (luckily he has no control over finances and no access to company bank accounts, if I could dispose of him I would, I am wating for him to get a CCJ though, it will happen at some point, as that would require him to resign as a director).

In previous businesses where I worked for others and had overview of payroll there always seemed to be about 20% of staff want the pay run in December to be moved forward to before Christmas, around 40% of staff are absolutely against moving the pay date and 40% are indifferent. Personally I have never seen any benefit to moving the pay date forward, getting paid earlier does not mean that there is more money, it just means a disruption to budgeting and seems a pointless exercise. For those who can budget properly it presents no benefit and for those who cannot budget properly it makes late January a car crash, so it would on balance be a bad idea. 

EssexHebridean

kimwp said:

EssexHebridean said:

kimwp said:

I'm curious - why is it an issue to get paid early? As in what are the practical steps that mean people then have a lean January?

Because in some cases the money comes in anything up to two weeks early - and at a time when often financially things are a stretch of a good solid budget isn't in place. So the food shopping for Christmas and New year for example - gets done using the next month's pay, and some extras make their way into the trolley because "we can afford it!". Extra presents get bought because the bank account looks healthy for the time of the month - there is a perception that you have more money than in fact you do. With all the excitement of the festive season, it's very easy for people to forget that there are still the usual bills to pay in January.

Then the 2nd of January comes around and all the DDs flow out, and suddenly there is a negative figure, and still a month's food to buy, and the rest of the bills...

The thread was started some years ago after many years of seeing folk arrive here in January in a panic because they cannot make ends meet. To those of us who've been here for a while and "done the thing" - it's a very obvious message, but it comes down to being one of those things that if you don't budget, it can be an easy trap to fall in to.

Thanks EH, so it could be  people forgetting that the money needs to stretch to the end of January and thinking "it'll be alright" because of a distorted perception of having more than normal or just a spend and hope attitude. I was pondering if it was people spending based on the amount in their bank accounts, and maybe that was why it worked to move the money out and back in again. I think if I was the type to spend because I can afford it, I don't think moving the money away would help - I'd still know I had it.

It definitely can be that - and moving the money out, for a lot of folk, just takes it literally "out of sight, out of mind" and means that when they look at their bank balance what they see is the "real" story. In a lot of cases, I think the worst problem is the simple pressures and expectations around Christmas - there are so many channels now by which people see others apparently having the "Perfect Christmas" - social media for example, and TV. That perception - of things having to be perfect is often married up with "stuff". An example - back in October, furniture shops started advertising sofas - "available in time for christmas!" - now for the vast majority of folk, if they need a new sofa, it really won't matter if it arrives on November 27th, December 18th or February the 29th - they need something to sit on, their old one is a bit past it and has that annoying spring that pokes you in the proverbial if you don't know to sit just slightly to the side, and that patch where one of the kids spilled yogurt and then covered it with a cushion isn't getting any less sticky. So what is the "in time for Christmas" all about - it's about appealing to people's tendancy to like something that might impress their family and friends. when do most people have family & friends visiting - yes, Christmas. And once you've got people into that mindset of buying something that will wow their visitors, it's also very much easier to upsell to them too - that matching footstool is a really stylish touch, oh, and did you need a new coffee table? We'd deliver it for free if it came with the sofa and the footstool....Before they know it, they've just signed up to 3 years credit on several thousand pounds of new furniture, and all to make Auntie Doris say "OOh - aren't YOU fancy!" before you spend the rest of the evening worrying that your OH's mate who ALWAYS gets !!!!!! is about to slosh red wine all over the new sofa...

That's an extreme example, I know - but the illusion of perfect christmases prevails. It's rare on instagram for example to see the batch of charcoal-like mince pies that preceded the "perfect" batch, or the fact that actually, that "perfectly" roasted turkey had to do a mercy-dash to the microwave because on carving it just minutes after that photo was taken for the 'gram, it was revealed that it was drastically undercooked, and that "perfect" christmas even family photo with everyone in oh-so-cute matching PJs lasted literally the time it too to take it - after which child two was violently sick down themselves (too many mince pies!), OH announced that he felt like a right wally, and went and put on trackies and a t-shirt, and you sploshed Baileys all over yourself as you tried to grab a bin for child 2 to vomit into...

Make your own "perfect" - and make it realistic, and achievable, and make it fit YOU and your budget. Ignore what others think - if your "perfect" is fish & chips, a beer and an extra degree on the thermostat in front of a spectacularly un-christmassy film - fabulous. I bet you'll be having a lot more fun than all the people who've spent an absolute fortune on an illusion that is tremendously hard work to keep up. It occurs to me that a fun Christmas Eve game might even be a gentle round of "what happened next" while scrolling through other people's carefully curated "perfects" on insta...!  

EssexHebridean

@MattMattMattUK I suspect those percentages equate fairly evenly with the levels of debt that folk are in - the 20% are those who are approaching over their heads, and the 2 40% bands are probably those who have some debt, but it's manageable and not escalating, and those who don't have debt, and are budgeting. 

MattMattMattUK

EssexHebridean said:

@MattMattMattUK I suspect those percentages equate fairly evenly with the levels of debt that folk are in - the 20% are those who are approaching over their heads, and the 2 40% bands are probably those who have some debt, but it's manageable and not escalating, and those who don't have debt, and are budgeting. 

Probably the case, some of the 20% were those who I knew had very competitive Christmases and New Years, most of the others were much more relaxed about it. They were also the kind of people who I suspect would have been in debt from knowing what they were paid and their lifestyles. 

EssexHebridean

You already know from previous posts that you really don't want to get me started on competitive christmases, don't you...!  

JCS1

In past job, we got paid early December and January to avoid a 6 week month. Never hear of anyone doing that anymore.

EssexHebridean

JCS1 said:

In past job, we got paid early December and January to avoid a 6 week month. Never hear of anyone doing that anymore.

There was someone posting on here last winter saying that this was how things were for them IIRC - of course all it does is push the problem down the line to February! 

JCS1

EssexHebridean said:

JCS1 said:

In past job, we got paid early December and January to avoid a 6 week month. Never hear of anyone doing that anymore.

There was someone posting on here last winter saying that this was how things were for them IIRC - of course all it does is push the problem down the line to February! 

Just meant Jan and Feb were both 5 week months rather than having a 6 week one; did make things a little easier with budgeting.