When I first started my real big-girl job two years ago, I was disgruntled to find out that my paycheck would be delivered monthly, as opposed to bi-weekly. How am I suppose to live off of one paycheck a month? However, I grew to love the simplicitiy of it: You get the check, pay all the bills, save a portion/pay debt, then live on the rest until the next paycheck. Easy-peasy.
My new job will have bi-monthly paycheck. Like a Type-A lunatic responsible PF blogger, I sat down to create my budget based on what I anticipate getting every 1st and 15th of each month. It’s not as simple as my one-paycheck budget. Should I have one paycheck to use for bills and one for play? Should I save a portion of each paycheck or just use one of the monthly paychecks for a larger saving amount? Would it be better to separate the amounts into different banks to help me manage it all? How will I create a chart for all of this? Am I completely overthinking this?!
So here I am a little dizzy from crunching numbers and seeking advice from the PF community. If you get paid bi-monthly, how do you use each paycheck? Do you separate your paychecks by living expenses and fixed expenses? Any thoughts, opinions, links and suggestions are welcome! After a few days I’ll post what I finally come up with. :)
For us, having a bi-monthly paycheck is no different than getting paid monthly or weekly. We set a monthly budget each month and have our paychecks direct deposited into our rewards checking account. We do not currently put any into savings since our rewards checking account gets 6% interest. At the beginning of each month, we have a couple of bills that automatically get paid (health insurance, internet, etc.). If you are not living paycheck to paycheck, there should be no reason why you have to divide your paychecks into different uses. Budgeting by the month has worked best for us.
.-= Olivia´s last blog ..Save Money By Saving Water =-.
I get paid every other Friday (26 pay periods/year). What I do is first calculate how much I want to save per year from my post-tax paycheck. I divide that number by 26. I then calculate (per pay period) what my living expenses such as rent, utilities, cell phone, etc. are by using ((monthly cost)*12)/26. Then I take my paycheck amount and subtract those two things (savings and monthly expenses). The rest I divide into an Allowance budget (for shopping, groceries, and eating out) and a Gas budget (for my car). I have an Excel spreadsheet with a row for each pay period. Each pay period I track my Allowance and Gas budget. Any left carries over to the next pay period. Conversely, any negative amounts also carry over.
That’s what I do, I’m sure it’s not for everyone. You could always have more specific budgets (one for shopping, one for groceries, etc.), but I learned that was too complicated for me. Anyways, hope that helps!
I usually take some amount to save out of each paycheck automatically. Then I typically use my last paycheck of the month to pay the bills that I have at the start of the month (Rent, Utilities etc) and my other paycheck for credit card and phone bill. Anything additional I have left over (after automatic savings and bills/fun) goes into savings again. This has worked pretty well for me.
Keep it simple!
I love getting paid bi-weekly! It works out to about two paychecks per month. (And, as I’m sure you’ve heard/read about, two months during the year it up being three paychecks a month!) Since rent is my largest expense, I take half of my rent out of each paycheck and put it into my “buffer” savings account; the one that’s through my bank, pays piddly interest but is accessible immediately. Then I have my other bills/savings transfers set up so they always hit a day or two after I get paid and I split them up about evenly between the two paychecks. Everything leftover is for my non-fixed expenses. :) I also track all my spending in an Excel spreadsheet using budgeted and actual categories.
For those two “extra” paychecks each year, I use the majority for savings (Roth IRA, E-Fund, Travel Fund, etc) and annual expenses such as car registration/insurance, plus always a little bit for fun!
Btw, check out http://www.paycheckcity.com – they have AWESOME free calculators to help you figure out how much you’ll get after taxes, 401k, health insurance, etc are taken out, specific to your state, either hourly or salaried. It’s almost exactly on for me! :)
I love the fact that I get paid twice a month! This can be hard to deal with the switch – took me two months (4 paychecks) to make the adjustment and re-learn how to manage the money.
As for my budget, I have my bills spread out – one chunk to come out at the start of the month (within 5 days of payday) and the other to come out in the middle. By splitting it up, if I happen to miss a payment, I’m not too screwed over because I catch it with the next paycheck. Automatic payments are a lifesaver with this!! Schedule 1/2 your bills (including some of your savings – this will affect the interest earned as well!) to come out when you get paid on the 1st and the rest around the 15th. It’s not going to affect your budget overall – you’re still bringing in money and you still have to pay things each month. You’ll just have a bit more to play with!
I do have a warning for you – ask your employer for a pay schedule. While you may get paid on the 1st and 15th, sometimes those land on a weekend or holiday. Find out now if that will affect you when the paycheck is deposited. If you get paid on a Friday, that’s fine, but will you have enough to cover those extra days if you get paid on a Monday?
Good luck and congrats on the new job!
.-= AprilFire´s last blog ..Not so alone anymore =-.
If I were you, I’d take out a smaller portion of each check for savings. it will get you used to living on a bit less, and could prove helpful if/when you get a raise.
Seperating into different accounts seems more trouble than it’s worth. I’d have an auto savings withdraw about 2 days after each check is deposited, then pay bills with whats left over.
One word of caution, you may need to monitor your cashflow at the beginning if all of your bills are due at the same time like mine are.
And just for clairification, are you getting 24 pay checks a year (bi-monthly), or 26 (bi-weekly)?
Enjoy the checks.
i have a couple of bills that are due around the 20th, and a few that are due around the 1st, so it works out well with when i get paid (15th and 30th). almost all of my small(er) bills plus tithe comes out of the 15th paycheck, and rent and credit card for the previous month come out of the 30th paycheck. i (mostly) had/have no control over the due dates on bills, but i did realize that i needed to start tithing out of the 15th paycheck a few months ago, b/c doing that with rent and an occasionally higher-than-usual cc bill got a little tight at times.
i have almost everything automated, so that i don’t really have to worry about it, though i do need to get back to tracking my cc spending. took a little break from that for a while.
I have bi-weekly paychecks, but I treat them as bi-monthly paychecks and use the two extra for my Roth IRA. The way I deal with budgeting has gotten more fluid as my discretionary income increased , but I pay for my rent out of one check (I count the one closest to the end of the month as my “first” check of the month) and with the extra I have moved some other things into the first paycheck as well. In the beginning pretty much everything came out of the second since my rent was close to the amount I was taking home. My savings and irregular expenses are currently split in half on the paychecks, and I chunk this out to maximize interest instead of doing the “divide by paychecks on yearly goals” thing.
In short, it’s like this:
1. half of savings/budgeted goals, rent, phone, spending money
2. half of savings/budgeted goals, everything else
I dedicated $500 slush to float those “everything else” parts for the beginning of the month, and I use my credit card the same way–I set my due date around the 20th so the cycle ends at the end of the month. I update my payment amount immediately, though, so I know that I’m still staying within budget. I just always have it as the last payment out that month.
I budget based on each paycheck. First I divided up my bills so that half are due at the beginning of the month (rent, cable) and the other half around the 21st of the month (cell phone, car payment, utilities). Each “half” of bills is equal to about the same amount. I then put a set amount in savings with each paycheck and then live off the rest until the next paycheck. I keep a budget in Excel and each tab is one month and it is broken into two halves. So I’m really budgeting for every two weeks, not by month. I was paid monthly in the past and hated it. I never had enough left over at the end of the month!
I think money is money. If you’re saving every month, there will be money in your account to pay your bills when they come. It doesn’t really matter which paycheck it comes from.
.-= me in millions´s last blog ..Monday Morning Mother’s Day Inspiration =-.
I like getting paid every other week. I’m lucky that one paycheck tends to fall in the middle and one towards the end of the month so thats how I divided up my bills. Some are due towards the middle and some are due towards the end. And whatever else I have for living and saving expenses. It seems to work out nicely. Good luck!
.-= Serendipity´s last blog ..Let’s Hope The Apple (Me) Fell Far From The Tree =-.
I have been paid twice a month (1 and 15) for 10 years now. I would suggest working on a monthly budget as some months will be closer to 4 weeks and some more than 5. (For example if you have a weekly grocery budget, you will really need to have three weeks worth of groceries on that second paycheque.) The worst with being paid the 1st and 15th, is when the days are weekends. Like a previous poster mentioned, you need to find out exactly when you are being paid. For me, if the 15th is a Sunday, we get paid the Friday before (13th). If it is a month with 31 days, it is a long time until the 1st rolls around again!
After dealing with this for a decade though, we are moving to bi-weekly pay at the start of the next school year. I can’t wait!
The last time I got paid monthly was when I was working for an agency in my undergrad, but I also had a part time gig at the gym at that time which paid bi-weekly so I didn’t really feel like I got paid monthly. I do agree with you though, it’s kind of time consuming creating a bill payment plan and budget where you have to plan according to 2 paychecks. Especially annoying if you’re like me and work for a company that decided to go from paying out on the 15th and 30th to the 2nd and 19th (because those are just WAY better dates … that aren’t even the same amount of days apart!!)
.-= HighClassLowIncome´s last blog ..A sign I’ve completely fallen off.. =-.
I used to try to work it so that certain bills got paid out of certain paychecks depending on the fortnight. But I’ve found it easier to make each paycheck the same – so that every time I’m paid, I put the same amount into different areas – bills, savings, etc. And I have different accounts at my bank to help it manage my funds.
.-= eemusings´s last blog ..The plight of the journalism graduate =-.
I get paid on the 1st & 15th of each month, so I budget each paycheck.
Most of my living expenses are paid on the 1st, becuase their due date hits before the 15th.
I create the budgets on the same excel spreadsheet, so it will calculate the monthly total.
You can see an example of my format towards the bottom of my post at http://ifiwereawealthygirl.blogspot.com/2010/03/full-disclosure.html. The example include a couple extra columns that I don’t use on a monthly basis.
.-= Broke by Choice´s last blog ..Car Insurance =-.
I have a bi-weekly paycheck — but I pretty much assume that all the money I’ll get in a month is available for the month on the 1st (before it is in my account!) because I do nearly all my spending on CC and pay them with each paycheck. Obviously this is not going to work for people who aren’t already “ahead” and are living paycheck to paycheck.
Except for my rent – I put half my rent in a designated rent account each paycheck.
I just realized how complicated this sounds. Ha.
.-= SP´s last blog ..Happy Weekend! =-.
I also get paid every other Friday, with 26 paychecks in the year. Maybe I’m just lazy, but I have my bills split up so that some go to each paycheck. My rent and car insurance come out of one; I use what’s leftover to buy gas, groceries, and fun. My car payment, student loans, cable bill, and Roth IRA savings come from the other…again, with what’s left over I buy gas, groceries, and fun. I always use the two “extra” paychecks I get every year for savings or debt repayment.
.-= TeacHer´s last blog ..Mini Challenge Do-Over =-.
I used to get paid every other week but now get paid on the last day of the month (so still some variability there). What I do is pay all bills via credit card and then send some money to the credit card every week.
That way no bills come directly out of my checking account so I don’t have to worry about whether payday is on a weekend or anything.
I think you could set up a system like that so that will take care of your budget.
.-= Lulu´s last blog ..How I Save Money At CVS: 10 May 2010 =-.
we find it best to live off of last month’s 2 paychecks… so at the beginning of may, we took both paychecks from april, and made our budget! we do this every month and we love our system — but, you do need to be able to start out with a month of living off of saved money, while you accumulate your paychecks for the next month.
I split both checks into a savings (for expenses) acct and a checking acct. Like SP, I put everything on a CC and then pay it out of the expense acct, while writing checks from the other. Savings are currently from freelancing only so I manually deposit those checks but once the dust settles, I’ll just move whatever money is to be saved out of the expense into savings account.
.-= Revanche´s last blog ..My presence is the present =-.
Firstly, love the blog! I’ve been reading all the archived entries, and I really enjoyed your journey to being debt free. Very inspirational!
Secondly, I also get paid bi-monthly, but most of my expenses are monthly, so I think think about my paycheck as 1/2 my monthly income, and put money aside accordingly. For example, my health insurance premium is $108 per month, so every paycheck I set $55 aside. Every second paycheck the premium is automatically deducted from my account, and I don’t have to worry about it.
The only tricky thing is that after I ‘set aside’ my money, I have a surplus, so when I look at my bank account I have to mentally subtract the ‘set aside’ money from the total to get a true idea of how much money I have left.
hey mpp, i went from getting paid monthly to weekly when i took this new job. it was a weird adjustment but i think i’m finally settling into it (4 months later). it was lucky that i have bills that are due at varying times throughout the month, so now i just pay them as they come in. before, i would pay everything the 1st week of the month when my paycheck came in and then have the rest as spending/living money. i’m definitely spending less now because i’m more connected to how things are going – and i get excited every week when i get paid (instead of every month). xo, ♥kaileenelise
.-= kaileene elise´s last blog ..Jumping Into June =-.
Lordy, lordy, girl! You’re putting too much thought into this! lol
I’m paid bi-monthly, and I use my first check of the month for debt repayment, entertainment budget and groceries (pretty much anything that isn’t a set amount). Then I use the last paycheck for all bills (rent, cell, electricity, internet). Don’t overthink it. ;-)
I come across this question and the comments when I reserch the word “bimonthly”. I don’t know the answer of the question, but I want more clarification about the word “bimonthly” itself. I checked written and web dictionaries and I got more confused. Please, google, yahoo or aol them by typing “bimonthly” or “bi monthly” or other search other places and get us/me what it really means the word bimothly. Is it paying two times in one month (on the 1st and the 15th of the month); or, paying my dues every two month. (6 payments per year)
@Wilshire the second one. Bimonthly means every other month just as biweekly is every other week. Semi monthly would be twice a month
One paycheck goes to savings. The other paycheck covers your bills & fun. Simple!
I despise getting paid bi-monthly or bi-weekly. I always think I am getting shorted money this way no matter how many times I go over it or that I am reassured by others, I still always think I am losing money getting paid this way.
That is because being paid often encourages you to spend money on unimportant things.