AVAILABLE SALARY = SALARY minus COMPANY DEDUCTIONS minus PAYMENTS MADE BY YOUR BANK & OTHER FIXED PAYMENTS

Remember the balance above?  There are three items on the right of the = sign.  Last week we dealt with COMPANY DEDUCTIONS.   We now move on to the second item.

If you already have a bank account, your salary goes into this account each month.  Your bank probably makes payments on your behalf.  These payments are likely to be insurance premiums, and account payments you may have.  If you’re repaying a bond (on your house), your bank makes this payment for you.  None of this comes for free – so there are monthly bank charges too.  All these payments should go off on the same day of the month, a day or two after pay day – let’s make this the 25th.

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You need to know the total of all the payments made by your bank.  Why?  Say the total is R765.  You must make sure that there is NO LESS THAN R765 in your account on the 25^th.  Of course, it’s better if there’s a lot more than this in your account – we’ll write about this salary ‘cushion’ in a later blog.

There may be fixed monthly payments NOT made by your bank.  Your rent may be a direct cash payment.  School fees could be an example too.  Perhaps you contribute to the living of an elderly parent by a cash monthly payment.  You need to know the total of these ‘other’ payments too.

Now you can group ALL your fixed spending for the month.  Assume this is R3,700.  It’s easy to view your salary as the amount you have available to spend each month.  But stop!  If R3,700 goes out as FIXED payments each month, surely that R3,700 is not available to you.  So your available salary can be given by another balance:

AVAILABLE SALARY = SALARY minus ALL FIXED SPENDING

If we insert the real numbers into this balance, we have:

AVAILABLE SALARY        = 6,000 – 3,700

= 2,300.

So if you are considering some new monthly spending (like a new fridge, of even a funeral insurance policy) that money must come from R2,300, and NOT from your salary of R6,000.  Your available salary – that’s critical knowledge in managing monthly money.

At the risk of boring you: Your salary is NOT available to spend each month.  It’s only your available salary that you have.  If you need to commit to any new spending, look at your available salary.  Your salary is a number on your pay slip – a number that could lead you in a dangerous direction.  But now you know.

Jay Pillay’s first two critical decades were spent where his first decade began – in Pietermaritzburg. After studying at ML Sultan Technikon in Durban (anyone remember that place?), he then joined the sugar industry, working in Tongaat, Durban, and Xinavane – a sugar mill village 120km north of Maputo. Oh yes – there was a brief period of unfaithfulness, when he flirted with aluminium in Richard’s Bay. Upon retirement, he and his wife Dorothy – settled in Southport.

Jay began writing about salary management (for ordinary people living on a salary) in the early 2000s. Many of his articles were published by The Ripple Effect, a Durban-based corporate newsletter. In all his writing, Jay says he attempts to emphasise the big picture in salary management: it’s not just about making it to your next payday – it’s about making it to the end of your working life. It’s not just about your working life – it’s about your retirement too. It’s not just about the cost of living – it’s about the cost of dying too. It’s not just about you as a salary manager – it’s about your dependants too.

This 16-part series is being published h

There’s a second finally. To daughter Nikki, thank you for the picture.

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