How to Budget when you get paid Biweekly
Did you know that the whole time we were paying down over $300k in student loans, that we were getting paid with bi-weekly paychecks?
Yep! We were paid every two weeks.
So we did not have set dates each month when the paycheck would hit our bank account. It changed from month to month.
If you are paid on a bi-weekly schedule, then you know the frustration this can cause when trying to organize your finances and set your budget.
But the truth is that whether you are paid monthly, twice a month or bi-weekly, the principles of budgeting are the same.
I know that a lot of budgeting tutorials talk about budgeting your money for the month. And while that is still technically true when you receive biweekly income, going about your budget for the month needs to change slightly.
So, if you are paid on a biweekly schedule, then this post is for you.
The Difference Between Bi-weekly and Semi-Monthly
When you receive a paycheck on a bi-weekly schedule, then you are paid every two weeks. This means that you receive 26 paychecks throughout the year.
When you are paid semi-monthly, your paychecks usually come on the same day every month, such as the 1st and the 15th of the month. You receive 24 paychecks throughout the year.
With a paycheck that comes every two weeks, you need to plan a little more for how to pay for your expenses.
You could receive a paycheck on the 26th of one month, and then not be paid again until the 10th of the next.
That means you potentially have quite a few expenses that will come up between those two pay periods that you will need to account for from both paychecks, not just the paychecks that come within that specific month.
But the biggest difference between bi-weekly and semi-monthly pay schedules is that, with a bi-weekly income, twice a year you end up with an extra paycheck in a month.
And if you don’t have a plan for that money, it will disappear into thin air, instead of helping you with your financial goals.
Budget Biweekly Paychecks
List Your Monthly Bills and Expenses
Much like budgeting monthly, a biweekly budget requires that you list out all the bills and expenses you need to pay during the month ahead.
List out all your budget categories. Specify what the bill is, how much the expected amount is AND when it needs to be paid.
Knowing when the bills are going to be paid is crucial to organizing your finances and seeing success with your budget.
You need to know how much your living expenses are so you can move forward with a working plan to pay them. So list them out on paper, in an app, in a spreadsheet…. Whatever makes sense to you.
Create A Bill Payment Calendar
Creating a bill payment calendar for your biweekly budget is going to be a huge help in getting organized.
Using a calendar will let you really see what is going on with your money and visualize your incoming and outgoing money, and how it will all work together.
You can do this in a Google Calendar, your planner or print out a budgeting calendar sheet.
First, write the dates of your paychecks into the calendar, and how much those paychecks are expected to be.
Next, write in when each bill is due or scheduled to be paid. Don’t miss a bill or expense as missing bills are what send your finances into a tailspin.
Then grab some highlighters. This is where you get to see how your bills will be paid with each paycheck.
Pick one color for the first paycheck of the month. Then highlight each bill that will be paid with that paycheck.
Pick a second color of the second paycheck and highlight all the bills that will be paid with the second paycheck. Your calendar might look something like this:
You can also add in variable living expenses to your calendar, such as groceries and gas, with their designated amounts. Highlight those variable expenses to match the paycheck they will be drawn from.
This process could take a little figuring and trial and error, especially at first. You may need to split expenses between paychecks such as half of your rent will be covered by paycheck #1 and half by paycheck #2.
If this is the case, you will need to have some extra money in your bank to cover the full payment for this month. And then plan to split it moving forward.
This whole highlighting process is meant to help you see when your bills are due, and how you plan to pay for them.
Getting this organized will help you work towards your financial goals and not be so stressed about how and when bills are getting paid.
Create Your Bi-weekly Budget Plan
Okay! Now that you can see when you are being paid, when bills are due, and which paycheck will pay what bills, you are ready to make your biweekly budget plan.
As you make your budget, don’t forget to include your weekly or biweekly grocery budget, gas for the car, fun money and any other variable expenses.
Your biweekly budget might look something like this:
Once you have made your biweekly budget for the first paycheck, do it again for the second.
You can either make it in advance, or when the money hits your bank account.
But either way you need to make sure you know the plan for each paycheck and all the money coming into your accounts.
If you have money left over for either paycheck, you can set that aside for financial goals such as emergency savings, saving up to get ahead on bills, paying off debt, adding towards your sinking funds or other money goals.
The point is to never wonder where your money went come the end of the month or the next paycheck.
Track Your Spending
I know it can seem frustrating to keep track of your spending, but this is really how you know if your budget is working.
Track when bills are paid, how much you paid for groceries or gas. It really only takes a little bit of time each day or week.
And doing this is the BEST way to get involved with your finances so you know where each and every dollar is going.
When you track, you can go back and look at the previous pay period or month to see where your money went, if you went over budget (and why) and what changes to make moving forward.
This is how you make a budget that really works for you.
What to do with the extra paycheck you get 2 times a year, when budgeting biweekly paychecks.
I know it can be tempting to see that third paycheck hit your bank account and think “Yay! Free Money!” But I strongly advise against just spending it like it is free play money.
Each and every paycheck needs to have a plan and a job to do. These two bonus paychecks are no different.
When we were paying down debt, we would pay tithing out of the extra paycheck and then it would ALL go towards those pesky student loans.
Your situation may be different. You might need that paycheck to pay for the beginning of the next month’s bills. You could use that paycheck to create a buffer in your checking out, create a savings account to get a month ahead on bills, put it towards sinking funds or other savings goals or throw it at your debt as an extra payment.
Whatever you decide, make a plan and work the plan.
Tips for a successful Biweekly Budget Plan
Figuring out how to make your budget work, when you are paid biweekly, can feel confusing and frustrating. But it doesn’t have to. Here are some extra tips for how to succeed with your biweekly budget.
Ask for adjusted payment dates. Many bills are set to be paid/come out on a specific date–like utilities and credit card payments.
Call up those companies and ask if you can adjust the payment date. Many companies are willing to work with you if you have had good payment history and are just asking for a date switch.
This will help you so your bills can be paid more evenly between your paychecks–instead of one paycheck getting the bulk of bill paying responsibility.
Keep a checking account buffer. I have mentioned this above. But you should keep a buffer in your checking account, just in case an extra bill comes out or something is more expensive than expected.
This will keep you from having any overdraft fees. It doesn’t need to be large. A couple hundred dollars should do the trick.
Build up a month’s worth of expenses. One of the best ways to stay on top of your budget, when getting a biweekly income, is to build up enough money to have a month’s worth of expenses on hand.
This will help you stop the paycheck to paycheck stress. Since your pay date changes from month to month, this will allow you to make sure you always have enough to pay your bills when they come up.
No more stressing over paying the bills. And you just keep replenishing this savings amount when it dips below what would be needed to pay the bills.
Separate checking account for bills. Create a separate checking out that you use only to pay bills.
When you have the separate account, you add money to it for the bills that need to be paid. Then you know to ONLY pay bills from this account and you don’t accidentally use money you need for bills to pay for something else.
This is a great trick to keep your finances organized and on track.
Final Thoughts on Budgeting a Biweekly Paycheck
The most important thing to remember, when budgeting a biweekly paycheck, is to plan for your monthly expenses.
Use a calendar so you can see when bills are due and how they will be paid. Failing to plan is what will get you in trouble.
I know it can feel confusing, I promise this process works. Creating a plan for each paycheck, and tracking your spending, will allow you to create a successful budget that works for you!
Do you get paid biweekly and need to budget that way? What are you best tips and tricks for success? Let me know in the comments!
And please reach out if you need help. I am here for you. You got this!