If you receive a bi-weekly or semi-monthly paycheck, you may have noticed that most budgeting advice and tools focus only on those who budget monthly. Guess what? I want to help you budget effectively based on how you get paid and not the masses.
There isn’t one budgeting style that works for everyone. Bi-weekly pay and semi-monthly pay comes with some additional budgeting challenges that monthly budgeters don’t have to think about. Don’t worry though, with a little planning and organization you can become a semi-monthly and bi-weekly budget rockstar in no time!
Let’s get started, shall we? Throughout this post, we will be following Betty and Joe. Keep in mind that everyone’s financial situation is different and this is just one example.
Create a monthly projection first.
You may be thinking that I’ve already ignored your pay frequency, but I haven’t. By writing down your entire month of income and expenses first, you’ll be able to make a plan for each pay period without wasting time trying to figure out your complete financial picture later on in the process.
Here are the items you’ll need to list before you create your bi-weekly budget:
- Total income (after-tax and paycheck deductions)
- All fixed expenses (bills & utilities)
- Any variable expenses (general spending)
- Minimum payments for all debts
- All savings contributions (sinking funds, after-tax retirement contributions, emergency funds, etc)
Regardless of what method you choose to craft your budget, make sure to include the pay dates and due dates for all bills.
Check to see if your expenses are greater than your income.
If your monthly expenses are greater than your income, look for ways to cut or eliminate expenses and/or find ways to increase your income.
When we started budgeting, we cut out everything we could live without. This included cable, our 2nd car, hair stylists, nail salon appointments, magazine subscriptions, etc.
If your expenses are less than your income, congrats! You can still follow the steps above if you want to increase the amount of money you’ll be able to direct towards the things that matter to you.
Even after becoming debt-free, we still look for ways to save or cut costs. The fear of being broke again keeps us motivated to spend intentionally but we definitely have loosened the reins a little bit.
Plan your bi-weekly budget out per paycheck.
Many of you may normally receive 2 bi-weekly paychecks per month. Then, 2 months out of the year you receive a “bonus 3rd paycheck”. I personally recommend that you budget based on 2 paychecks and then use those “extra” paychecks to beef up your emergency savings, pay down debt or save for large expenses.
Sorry for the semi-monthly budgeters out there, you always receive a paycheck on the 1st and 15th – so that means no extras 😞.
Here’s a snapshot of how this would look in our bi-weekly budget template:
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Not enough money to cover the expenses during a particular period?
- Contact companies to see if you can change your bill dates.
- Split bills up over multiple paychecks.
- Allocate full amount for certain bills in another period.
As you can see below with Betty and Joe, their $1,200 rent is due by the 5th but that would take up 50% of their income in the first half of the month. In order to even out their budget, they decided to split the rent over the 2 pay periods.
It’s important to keep in mind that in order to do this approach, you’ll need to have the full payment for the current month to cover the bills that you choose to split going forward.
If you’re starting your budget in the middle of the month then you’ve already paid your large bill and can just start splitting them in order to provide yourself with some relief. If this is confusing, don’t hesitate to email me.
How to stay on track when budgeting bi-weekly paychecks.
It doesn’t matter what your pay frequency is, staying on track once you do create a budget can be hard. Here are a few things that I recommend you do in order to stay on track and achieve your goals:
1. Set up a separate bill account.
Guys and gals, setting up a separate bill account changed our lives for the better. This not only keeps you from spending your rent money on a quick getaway, but it also keeps companies from auto drafting funds out of the account where all of your money is deposited.
Make sure to choose a bank that doesn’t require minimums so you aren’t paying extra to have another account. I’d also recommend that you keep a buffer in the account so that you don’t overdraft ;).
2. Track your variable expenses.
This is the part where folks want to fight me or give up on budgeting altogether, but I swear tracking your spending will help you know where your money is going.
I prefer to use the Goodbudget app but I’ve also tried
3. Adjust your budget as needed.
At the end of the month, you’ll input your actual spending and income into your bi-weekly budget or semi-monthly budget template (or another document) and this will provide you with an overview of what needs to be adjusted going forward. We don’t want to spend more than we make, like ever, but living below your means can help cover those “Oh crap” months if they happen to occur.
Remember, it takes 3-4 months to create and fine-tune a budget that actually works for you. Even after that time frame, things may still pop up that will need to be addressed in your budget. This is why it’s so important to make sure you at least have the basics covered so emergencies are simply inconveniences.
Financial Extra Credit
So, now that we put our weekly budget together, what’s next? Glad you asked!
I challenge you to make a plan for accomplishing the things below in order to make managing your money each month as painless as possible.
Start small and work your way up. Rome wasn’t built in a day and your bank account won’t start overflowing in a day either.
- Get one month ahead on your expenses
- Save an emergency fund
- Pay off high interest consumer debt
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That’s all Wealthy Fam! I really hope this helps you get started budgeting your money. Please remember to be patient with yourself while you work on following your semi-monthly and bi-weekly budget.
I still want to throw my budget out the window every now and then but I’ve learned that keeping your goals in the forefront of your mind helps to ease the frustration.
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$tay Wealthy Fam,
— Dannie
This is a great post. I am starting my budget over and trying to learn a new approach after so much time being paid monthly – I’m now in a role where I am paid biweekly and need a fresh start! I will be emailing you on advice for starting the budget in the middle of the month. Thanks so much for this helpful info!