A Bi-weekly payroll is often confused with semi-monthly payroll because they seem very much alike, but they’re not. If you receive a check every two weeks, you are entitled to 26 paychecks per year. That’s two paychecks more than someone who is paid twice a month. In both cases, you’ll have to budget keeping in mind that though you get your salary more than once a month, you’ll be paying your bills once a month.
Many people who have struggled to stick to a monthly budget, have succeeded in following a biweekly budget instead. One reason behind this is the fact that no two weeks are the same. Also, your entire monthly spending gets divided into fewer, manageable transactions. So, in case your budget didn’t work well for the first two weeks, you can tweak your next two week’s budgets instead of waiting for the month to end.
If you’ve gone from a monthly pay schedule to a bi-weekly pay cycle lately and need to set a realistic budget, here are some tips for you:
Treating Third Paycheck Month Normal
Under a bi-weekly payroll, some months will have three checks while others will have two. So, it’s important to first create consistency in your monthly take-home pay for all 12 months of the year. Assuming that your monthly expenses remain constant every month, you should budget considering those ten months when you get paid twice. If you’ve made it through the month and still have a few dollars left in your account, you should be able to manage with two checks even during the months when you get three paychecks.
It’s better to forget about the third paycheck while budgeting and consider it as an excellent opportunity to boost your savings, pay off your debt or fulfill any other financial goals when it occurs. As a result, you won’t have to compromise on your retirement plan while managing to pay your usual monthly expenses.
Budget Paycheck #1
The first step in creating your bi-weekly budget or any budget for that matter is to make a list of all purchases and expenses. To know your first paycheck expenses, you need to mark those bills that are due before the next paycheck arrives and create estimates of other expenses like groceries, utilities, gas, and so on for the two weeks in question. After paying for the expenses of the first half of the month, if you have any money left over you can add it to your emergency or retirement funds. While doing all this, you also need to make sure that you keep track of your spending and not go over budget.
However, it could be so that your bills might exceed your first paycheck amount. It’s when you might need to have some extra money in your account. If you’ve done your calculations right and don’t see such a problem coming up, you won’t need any buffer.
Budget Paycheck #2
Moving on to the second paycheck of the month, you can now start thinking about the remaining bills for the month. You’ll have to budget the same way as you did for your first paycheck. The expense list should again contain all the statements due after your second paycheck and further cost of groceries and other expenses. For an occasional glitch in the budget, you know there are same day quick cash loans to help or savings from your first paycheck.
When you have a large amount of money deposited into your account, you tend to spend more. So, when the same amount is deposited in two installments, you become careful with your money. The success of a bi-weekly budget thrives on this very concept of spending money. You could have your bi-weekly budget even if you don’t get paid biweekly. All you need to do is first break monthly bills into weekly amounts and budget each paycheck accordingly. Finally, strategize on how to use your third paycheck to accomplish your financial goals.