How to Budget When You Get Paid Once a Month

How often you receive your paycheck can significantly impact how you budget. Some employers give you a choice of how often you are paid, but a company usually has the same pay period for all employees.

If you are considering a job that pays once a month or can choose the frequency of your pay period, you might be looking into the pros and cons of getting paid once a month.

Budgeting when you get paid once a month has its own set of challenges.

There are benefits and drawbacks to every type of pay schedule. Today, we will take a deep dive into the good and the bad of getting paid once a month.

5 Easy Steps to Budgeting When You Get Paid Once a Month

Step one: know your income and expenses

When creating a budget, first, know all the expenses you have.  Go through all bank statements and list all the monthly expenses and when they are due.

Include anything that might come in every quarter and once a year.  You can divide these into monthly amounts and have a sinking fund.

For example, if something is a variable expense like electricity, then look for an average bill amount. Consider an emergency fund for things outside the usual monthly bills if you have extra money you can use for it.

Step two: plan for other variable needs

Decide how much you need to spend on groceries, gas, date nights, and other activities.  Consider grocery shopping once a month.

Add this money to cash envelopes to stay within your budgeted amount.  Have them marked for weeks one through 4 (or 5)

Step three: create a zero based budget

Plug all the numbers into the budget and ensure they equal zero.  A zero-based budget is fantastic because every dollar has a job.  And with some practice, all your money will have its system.

Step four: cut back on spending

If you find you are overspending and have more month than money, it’s time to tweak the system.  Creating a budget is all about trial and error. 

Consider being more frugal and cutting out things that are not needed. That way, you are better placed to meet your financial goals or even start saving goals.

Step five: don’t forget fun money

It is a good idea to give yourself some fun money.  Having an allotted amount of money will help with the feeling of restriction and help control spending habits.  Also, keep in mind that all the money you have until next month is a big lesson and something that will get easier with time.

What are the different types of pay periods available?

There are four types of pay periods: weekly, bi-weekly, semi-monthly, and monthly. In 2019, the Bureau of Labor Statistics reported the most common pay period was bi-weekly, with an estimated 42.2% of private companies paying their employees every other week. The next most common pay period was weekly (33.8%), followed by semi-monthly (18.6%) and monthly (5.4%). 

A weekly pay period means employees are paid weekly (52 paychecks a year). Employees with a bi-weekly pay period are paid every other week (26 paychecks a year). Semi-monthly pay periods are twice a month, usually on the same dates each month, for example, the 1st and 15th (24 paychecks a year). The least common pay period, monthly, pays on a set day each month (12 paychecks a year).  

What types of industries typically have monthly pay periods? 

If you are a military member in the Army or Air Force, you can opt to have your payment in a monthly lump sum. Other industries with a higher frequency of monthly pay include finance, trade, transportation and utilities, and private businesses involved in the information industry. 

Companies choose monthly pay periods for a few reasons. It is easier and cheaper for them to run payroll once a month versus processing payroll 2, 3, or 4 times a month. However, it is the least common pay period used by private businesses, most likely because they recognize that some employees struggle with getting paid monthly. 

Pros of getting paid once a month:

Getting paid once a month has several benefits. Therefore, budgeting once a month is a necessity.  The overarching advantage is that it simplifies budgeting when you get paid once a month for the following reasons: 

One budget:

Once a monthly payment means you only have to work with one budget. Instead of splitting large bills like a mortgage between weekly, bi-weekly, or semi-monthly paychecks, you will only have one budget that will stay consistent for the whole month.

All of your pay at one time:

Each payday, you will have all of your money for the month at once. This will make it easier to make large payments or purchases because you will have every penny for the month in your bank at the same time.

All bills get paid at the start of the month:

You can set up your bills so they will all get paid at the beginning of the month (or before the beginning of the next month). This will make it easier to keep tabs on all of your bills. 

Easier to contribute to 401K/Retirement:

It will be easier to set up retirement contributions from your once-a-month paycheck. You’ll be less likely to contribute only *IF* you have money at the end of the month because you’ll start with your whole paycheck upfront. 

Easy to spot errors:

Getting paid once a month drastically reduces the pay stubs you should be monitoring for any discrepancies in pay. It will be easier to see when errors have happened if you only have to check once a month. 

Prepares you for retirement pay:

If you plan to draw from Social Security or a pension for your retirement, living and budgeting once a month payday will prepare you for retirement pay, typically dispersed monthly.

Agile investments:

 If you are careful with your budget and spending, having a bigger payday will allow you to be more agile when investing. You will have more money to pull from if you see a significant investment you want to jump on.

Helps you think big picture:

 Although it might take some adjusting to thinking more about the big picture, living on a monthly budget will force you to think ahead. If you have a birthday or anniversary, you’ll need to plan and set aside money before that date. Christmas shopping must be done a bit each month or planned by saving a certain amount every payday.

Less Stressful:

Overall, getting paid monthly makes budgeting once a month more straightforward and less stressful.  

Cons to getting paid monthly

There are some definite drawbacks to getting paid once a month, including:

Easy to overspend:

 This will be true, especially when you first begin getting monthly pay. Your bank balance will be so much larger than you are used to on payday that you might be fooled into thinking you have plenty of money. The trick to overcoming this misconception is carefully planning your expenses and saving money for the unexpected (hello, budgeting!). 

Long wait for next check:

If you DO run out of money due to unexpected expenses or poor planning, a monthly pay period means a potentially looooong wait for your next check. 

Must be meticulous at controlling spending:

Since you are receiving all your money at once, you must be very careful with your spending. This includes thinking about expenses that might pop up as the month goes on and setting aside money so you don’t run out before the next time you are paid. 

Tax Withholdings aren’t as quick to adjust:

 If you decide to change your tax withholding, it will take longer to adjust that since you will have to wait until the next pay period for it to kick in. 

Who Should Choose Once a Month Pay Period?

If you can choose the type of pay period you want or are considering jobs with different pay periods, here are some things to consider. 

Choose a Monthly Pay Period if you: 

• Want to simplify bill paying and the family budget
• Are good at forecasting future expenses
• Like to plan ahead to see progress towards long-term goals
• Want to invest more in your retirement plan or work towards savings goals
• Don’t feel the need to spend money just because you have it

Getting paid once a month can simplify your budgeting and be dangerous if you have difficulty controlling your spending or don’t typically like to plan. There may be an adjustment period as you get used to seeing your bank balance get lower and lower as the month goes along, but this type of pay period can also empower you to spend wisely. 

If you find yourself in a job that pays monthly, one of the best things you can do is establish a budget and plan. Try zero-based budgeting with sinking funds to plan for expected and unexpected future expenses. 

By assigning every penny a job, you will know exactly where your monthly paycheck is going and have the security of knowing you have funds available for expenses that might occur later in the month. 

If starting or fine-tuning a budget for a monthly pay period feels overwhelming, I would love to offer my assistance as a certified financial coach.