Budgeting a biweekly income is just like budgeting monthly, except you are taking a more specific and detailed approach. Knowing there are only two paychecks instead of four each month reminds you that being much more intentional with your money will give you success in your financial journey.
Creating a budget is at the top of the list when it comes to sound money management.
Knowing where your money is coming from and where it is going gives you a direction to move forward. Understanding your total monthly income and dividing it in half will simplify the process.
My husband has had a biweekly income for twenty years. I would like to think I am the master at bi weekly budgeting.
What Does Biweekly Pay Mean?
It seems that this is the most common way for employers to pay their employees. It means that you would get paid every two weeks instead of every week or once a month.
The schedule is set up by your company but will always be every two weeks on a specific day of the week. Ours is Friday.
Is it better to get paid biweekly or twice a month?
The best part of biweekly versus twice a month is those “extra” paychecks you get twice a year.
Because of how they fall and how I budget, I am not sure I consider them “extra money,” as I can explain later.
Although there is some extra money to put towards other things, there will always be a specific amount of money that comes out of each check for sinking funds and expenses.
But let’s get to those five simple steps to budget that biweekly income first.
The Difference Between Bi-weekly and Semi-Monthly
While both biweekly paychecks and semi-monthly pay schedules mean you get paid twice a month, the difference lies in the frequency and regularity of payment.
Biweekly payroll happens every two weeks, typically on a specific day of the week, resulting in 26 pay periods in a year. This schedule can lead to the occasional month where you receive three paychecks instead of two, which can feel like a bonus.
On the other hand, semi-monthly payroll means you are paid twice a month, typically on fixed dates such as the 1st and 15th or the 15th and last day of the month. This results in a total of 24 pay periods in a year. The consistency can make budgeting more straightforward, but there’s no ‘extra’ paycheck like you find with biweekly pay.
The Best Way to Budget Biweekly
1. Find all your bills
The first step is to look at what you pay on a monthly basis. Go through your stack of bills or pull them up on the apps on your phone. If you need to log on to your online banking to find your monthly expenses, go through them from there.
If you have yet to learn what you owe and when it’s due, you may have to log on to your electric company website and get that info. If you can’t do that, go old school and call them.
Now might also be an excellent time to negotiate with insurance, phone bills, or cable and internet companies.
If you are unsure whether you have all your bills, check out this post on budget categories to ensure you have everything. Remember things like car payments, utility bills, debt repayment, and those tricky variable expenses, as well as regular deposits to things like a savings account or retirement plans.
2. Write it all down on the calendar
Add them to the appropriate due date on the monthly bill pay calendar. You can use your phone, your favorite planner, or the calendar hanging on the wall.
There is also the option of a bi-weekly bill payment spreadsheet for those who get super excited about spreadsheets and are on a bi-weekly income!
You can print out this free bill pay calendar and biweekly bill tracker.
As you fill this out, highlight or use a different color for each pay period.
For example, if your car payment is due on the tenth of each month, you would write that on the tenth, then highlight that in color you chose for the first paycheck of the month.
Also, remember to mark the payments that automatically come out of your account each month.
This is an excellent time to think of anything else that might come up this month that you must budget for. Are there special dates or birthdays that you need to plan for?
Field trips that will need $10 or the big fuel bill you need to top off due at the end of the month?
Keep this handy so you can see it when it’s payday. Hang it on the corkboard in your office or on the side of the refrigerator.
Now that you know what bills to pay and when, do the following steps each time you get paid.
3. Send money to your savings or retirement account
As you are budgeting biweekly, you also need to save biweekly. This means adding money each paycheck to some type of savings and or retirement account like your 401K.
Consider auto transfers from your checking account or direct from your check each pay period. They are a great way to make saving your baby’s emergency fund or your extended emergency fund easy with no thought required.
My husband’s 401K comes out of his paycheck each pay period, but our savings must be manually added to our Capital One 360 account each paycheck.
Then, we have another amount of savings for the next house project that is automatically transferred into separate savings accounts from our checking.
4. Get your cash from the bank
If you’re following the cache envelope wallet system like we are, this is a great time to go to the bank and get your cash for your envelopes, sinking funds, and spending money.
There is great satisfaction in stuffing those envelopes and tallying up the added money in your sinking funds.
I love taking these money slips I created with me to the bank, and my bank tellers love them, too. I have been using them for years, making everyone’s job easier.
5. Pay your bills
The final step after every bi-weekly paycheck should be to pay all your bills. Sit down and go online or write the checks for your monthly bills.
It usually takes me 20 minutes to pay all the bills indicated on the bill pay calendar.
Now, you are set for the next two weeks.
I usually do steps one to three on a Monday of the pay week, and on a Friday, I will get the cash, pay the bills, head to the grocery store, and do errands that same day.
Lately, I have been grocery shopping once a month, saving me so much time.
This is by far the best way to pay bills each month.
What to do with extra paychecks.
Depending on when that last paycheck of the month falls, you may have to roll that over to the next month. Pay the bills that are due at the beginning of that month.
Let’s say there are three paychecks in October. They will be in your account on the second, the sixteenth, and the thirtieth. That means November biweekly paydays will not be until the 13th and the twenty-seventh.
So, the paycheck on the 30th will need to take care of the bills due between the first and the twelfth.
There may be some extra money in between those bills that come due. You can pay off debt, savings, a freezer stock up, or your vacation fund.
The Zero-Based Budget and A Month Ahead
There are a few ways to look at a bi-weekly budget.
The zero-based budget assigns a job to every dollar. So the balance is zero when you have paid all of your bills, added money to your savings and retirement, and your debts.
When budgeting biweekly, the money coming in that paycheck is for the coming week’s expenses, down to the last penny. This way, you tell your money exactly where you want it to go, and you control your finances.
But wouldn’t it be nice if this month’s expenses sat IN FULL, waiting on those bills?
That way, the money coming in this next paycheck will be for next month. Talk about getting out ahead of it!!!
Those extra paychecks could be used to fund the month ahead method of budgeting.
If you are looking for a few ways to bring in some extra money and you can’t help but think, “All my money goes to bills,” you can check out this article on making more money.
The Downside of Bi Weekly Income Budgeting
You need to stay on top of this.
You need to check your bill payment schedule every month and understand what is coming. Every two weeks, you must sit down, pay your bills, get your cash, and adequately care for your money. Then, you can always see how much money you have coming into your bank account.
It takes more time.
You are budgeting two to three times a month instead of getting paid once a month. It’s not a one-and-done system.
You will need to have a close and comfortable relationship with your money and be awake and aware of when it’s payday and what you need to do.
It takes practice.
Budgeting a biweekly income will take some practice, like any other money management system. You need to allow yourself some grace until you conquer the new system. With practice, it will become second nature.
The Best Part About A Biweekly Budget.
It’s not nearly as overwhelming as a month of budgeting and bill-paying all at once. This way, you split it into the first and second half.
I get overwhelmed with big projects and need to break them down into smaller chunks. If I get too overwhelmed, I’ll do nothing and succumb to The Office and Candy Crush on the couch.
It fits the pay schedule beautifully and will help reach those financial goals.
Tips for Biweekly Budgeting
- Get Yourself and Finances Organized: An orderly financial life is a key to successful biweekly budgeting. Organize your bills, pay stubs, bank and credit card statements, and have a system to keep track of due dates and payments. Consider utilizing budgeting apps or spreadsheets for this.
- Include a Buffer in Your Budget: Unforeseen expenses can arise anytime. Make sure to include a buffer or contingency in your budget. This will safeguard you against any unexpected expenses and keep your budget intact.
- Set a Day and Time to Work on Your Budget: Consistency is crucial in budgeting. Dedicate a specific day and time every two weeks to review and update your budget. This can ensure you’re on top of your expenses and not overspending.
- Move Your Due Dates Around: If possible, Adjust the due dates of your bills to a time when you typically have more money in your account. This can help in efficiently managing your funds and avoiding late payments. Check with your service providers to see if this is an option.
- Automate Your Payments: Consider setting up automatic payments for bills that stay the same every month. This can save you time and ensure your bills are paid promptly.
- Be Flexible: Life happens, and sometimes things don’t go according to plan. If this happens, be flexible with your budget and make necessary adjustments as needed. It’s not about being perfect but finding a system that works for you and sticking to it.
Need More Help?
If you’re stuck and overwhelmed and need some one-on-one budget coaching, please feel free to reach out. I’m a certified financial coach and would be more than happy to offer some additional information.
You can read more about Financial Coaching here.
Final thoughts on biweekly budgets…
There are many options and styles of budgeting your finances, and a biweekly budget is one of my favorites. As a financial coach, this is the best way to budget biweekly.
But whatever you decide is best for you, budgeting and proper money management are the keys to personal finance success.
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