Essential End of Month Practices for Better Money Management

employee checking payslip details at end of month

It is the end of the month and you have received your payslip.

Should you really open it? You don’t have to verify the calculations your trusted payroll department has done, right? You wouldn’t understand anything about tax and NI anyway, right?

So why bother? You very well know the gross salary you need to receive as per your employment contract.

Let’s answer one question to determine if this article and spending an hour every month is useful – Tax code is the responsibility of the employee, so are you on the right tax code month after month? Ok, do you know your tax code?

As you open your payslip now to determine what your tax code is, I shall move on to list down all the end of month practices that is essential to follow month after month the day you receive your payslip.

1.      Gross pay

This is for those who are paid on an hourly basis, which includes doctors. Each month can be different – it can have 30 or 31 days, you may have or may not have taken part in the strike, you may have taken additional leaves. Spend some time to total up the number of days you have worked that month and multiply that with the standard hours you are paid for a day (which is usually 8 hours) – this is the total hours you have earned your gross pay for the month.

2.      Additional hours 

Most jobs demand working hours in addition to the regular 40 hours per week. Ensure you spend time to calculate all the additional hours you have worked in the month and double check the rate at which you are entitled to be paid for the additional hours.

3.      Employee benefits 

Employers provide several employee benefits. They are benefits you obtain without paying anything upfront since your employer pays for it and deducts an agreed monthly amount for the period you have signed up the benefit for. The benefit can be in the form of a car, an electronic appliance, private medical insurance, a holiday package etc. Your role is to keep track of the calculations present at the bottom of the payslip which gives details of the number of instalments pending, agreed monthly amount and total amount of the benefit.

4.      Tax code 

Now the most anticipated topic. A tax code is essentially the amount of allowance and the method of calculating your tax you are entitled for. Yes, there is a blanket allowance amount for all taxpayers but you have the option to increase the allowance amount. There is a list of work-related expenses you spend which can reduce your tax. All that you have to do is login to your HMRC account and fill a form to claim the work related expenses to increase your tax allowance. Some examples of work related expenses are – course necessary for your job, professional memberships, professional indemnity insurance and stationery/appliances you may buy specifically for your job.

You may protest to mention that a payslip is the responsibility of the payroll department of your organization and hence it is mindless to spend couple of hours every month on that piece of e-paper. But the moment something is yours it is your responsibility – it is your hard earned income, hence it is also your responsibility to ensure you received what you have earned through the month.

Money management starts with preparing a budget with the income you receive – it is what determines your lifestyle for the next 30 days. Hence it becomes essential to spend some hours a month to keep track of what you receive and make your end of month practices for better money management.

We can delve more into budgeting in the ‘Know your present’ program under 1-on-1 workshops. If you are interested to learn more about money management practices book a free discovery call now.

Written by,

Mrudula M

Personal finance coach & Founder

Million Goals