I’m bi….bi-weekly.

March 28, 2011 · 37 comments

For those of us that get paid every two weeks, we face an epic battle that others do not. For us, managing a budget is no easy task. Ten months of the year things are just fine, but when April and October come around, my whole world turns upside down…I get an extra paycheck.

Although it is definitely a good problem to have, it does make things more difficult than other pay schedules. Us bi-weekers really only have two options…

We can break up the two extra paychecks, by twelve, and calculate that in to our budget. Say for example you get $3K every two weeks. That means 10 months of the year your income will be $6K, but for in April and Oct it will be $9K. You can take the extra $6K (from the two extra paychecks) and divide that by twelve, this gives you $500. For budgeting purposes, you can average your monthly pay to be $6,500. In my opinion this method sucks. It’s a lot of work, a lot of planning, and a waste of time, since you actually make LESS than that 83% of the year.

I subscribe to the Booya-extra-money budgeting plan. Instead of breaking up my extra two paychecks over the entire calender year, I simply pretend they don’t exist. If I get $3K every two weeks (which I don’t), then I budget my cash flow around a $6K monthly income. When April and Oct roll around, I get a bonus. I can do whatever the heck I want with that money. Why? Because I have established spending habits around a $6K/mo income.

If you haven’t noticed…it’s almost April, which means I’ll have an extra $2,000 coming my way. And you know what I’m going to do with it!? Save most of it (haha, who didn’t see that one coming?). I’ll probably spend a bit of it this week as Girl Ninja will be joining me in Germany (We’re renting a car and going to France and Luxembourg). It’s nice to have an extra cushion to remind me I don’t have to be so darn frugal all the time.

I know there are others that get paid every two weeks. How do you budget for it? Is there a third another method I haven’t thought of? If you could pick your pay schedule would you do bi-weekly, twice monthly, or monthly?

 

{ 37 comments }

1 Emily

I have everything set up to every on 2 week intervals. That means bills still get paid with those two check but it then has me paying ahead on my bill. This worked out great when I was unexpectedly laid off. I didnt have to worry as much because my bills were paid at least a month in advance. I could afford to wait for unemployment to kick it.

2 Kevin @ Thousandaire.com

I used to get paid on the 15th and last day of every month. I loved it. Now I get paid every two weeks and I don’t love it. Although, I haven’t had a 3 paycheck month yet, so maybe I’ll change my tune then. My first one won’t be until July.

3 Jenni

Same story here. We were forced to switch from the 15th and last day of the month to bi-weekly in January. I was skeptical at first but we’ve managed to get a system working. I am looking forward to our first extra check in July!

4 Tom

I am this way with tax returns. What’s funny is I’m a tax guy, but for my own return I like to be surprised. I also don’t budget any bonus money or extras. I like to be very conservative on what I make and then enjoy the budget surplus that happens every year.

5 Melanie

We both get paid every two weeks, so four times a year we get an extra paycheck – booyah! Now, we also pay our mortgage every two weeks, so we have to deal with two extra mortgage payments a year as well. But with the rest, I do not absorb it into our regular budget – it goes straight to a separate account, and will usually be put in our “planned spending account”…like when we’re saving up for something and use that money to buy it…such as the Synthetic Ice surface we just put in our basement last week.

6 Sarah @ going on goals

I love being paid every 2 weeks. It helps me budget below what I actually make so I save more. The extra paycheck is great and really helps me save more and pay for big ticket items.

7 Becca

I go the “extra money” route too…but mine goes into my Roth IRA.

8 Ryan

My birthday was earlier this month and my 3rd paycheck will be arriving on Wednesday, so March is one of my favorite months. :). It doesn’t affect me too much since it’s just an hourly retail job, but it’s still nice.

BTW, do you have experience driving outside the US? I’m headed to Italy in the fall for a year long study abroad program and the program agreements make driving abroad sound like the most dangerous activity someone can do.

9 Ninja

Yeah, I have a rental car here (with an international drivers permit which cost me $23 at AAA). I’ve been driving for two weeks now and it isn’t terribly different than the US. I obviously can’t read any of the road signs which makes things interesting, but my GPS unit gets me around okay. I just googled “Germany traffic signs” and looked at some of the crazy signs I didn’t understand. I think I’ve got the hang of it okay, and coming from California I’m use to crazy drivers. It’s not too different. I’ve heard Paris is a different story though, was told not to even bother driving there. You should be fine.

10 Larry

I don’t know where Ryan is going, but drivers in Rome are maniacs. (I say this as a veteran of 40 years driving in New York City, where they are also maniacs. But in Rome they are really maniacs.)

If you go to Paris, do not try to walk across the traffic circle that surrounds the Arc de Triomphe and radiates in twelve directions around it. My friend tried doing that and didn’t understand why (a) he was the only pedestrian and (b) why half of Paris was honking at him. The right way: use the underground passageway at the Etoile station.

I too get 26 checks and I just treat them as extra checks twice a year, to be used for larger purchases or to save. In a previous job I was paid monthly and hated it.

11 CommonCents

I am paid bi-weekly as well. However I haven’t had one yet, my first is in June. I intend to put the money into all my regular funds and than the extra will go into my line of credit! I am so excited for June to come, just to be able to but an extra 500+ into it!!

12 Mo D.

I’m paid twice/month (15th and last day), and Hubby’s paid bi-weekly, so Apr. & Oct. get us a little extra cash to put away/save. At times, we’re paid in the same week (sometimes on the same day, which looks REAL sweet in the bank acount!). We recently changed our mortgage terms from monthly to bi-weekly accelerated, and we have the mortgage come out on Hubby’s pay days. We no longer get the extra 2 full paycheques a year, but we’re knocking down a nice chunk of interest by paying our mortgage this way.

I’ve never been to France, but once worked for a company who’s head office was in Paris… they said driving in the city was like taking your life in your hands, so I’d stick to public transit. Have fun!!

13 Makky's Mom

This phenomenon doesn’t affect us. Hubby gets paid once a month. In some ways it’s good, in others ways it sucks.
I get paid every 2 weeks, but since I take two 2-week long vacations off work per year (unpaid), those 2 extra paycheques don’t technically exist for me.

14 Austin

Yep… the third paycheck is just gravy. It doesn’t really make sense to average out those three-paycheck months throughout the year because you can’t really spend that $500 (or whatever it may be) each month! Like the tax refund, we save part of it, pay off a little more student loan debt, and might do something fun with a small portion of it.

15 Molly

DH gets paid once a week, so we have 4 months with an extra payday. I always try to budget it in, and have a definite place for it to go. Every 5 payday month though, DH seems to either have to take more time of than usual or something pops up. For that reason, budgeting a 5 payday month is a lot harder than a 4 payday month.
I always thought that we needed to fix it and try to budget that money, but now I’m starting to think we should just splurge or use it on something we need/want but don’t always have the money for. I always thought that was indulgent but now its starting to look like a good idea.
I get paid every 2 weeks but I don’t make a lot. All the money I make goes into savings or to pay off debt. Otherwise we spend it on stupid crap that we don’t need.
Our tax return we use for things we need, like my glasses or our birthdays (all 4 of us were born at the beginning of the year). We also have a certain amount for debt and savings.

16 Jason

At least you are getting paid. Have at least 2 weeks of income in the bank to make-up for it. Save up enough to have 2 weeks of income and then it won’t be as bad.

17 Sara

When I got paid biweekly I used the extra check like you’re doing – often using it to pay down my student loan or pay my car insurance earlier. But now that I’m paid monthly, I love it and wouldn’t give it up! It’s so convenient to just pay everything at the beginning of the month and not have to think about another pay check.

18 slug

I simply ignore it. I make more than I spend. Thus, it’s just more cash sitting in the emergency fund. I prefer biweekly pay because I get paid for my efforts in a more timely fashion meaning I can make that money work more quickly for me rather than sitting in my employer’s coffers.

19 Eboo

Try budgeting with one pay period per YEAR, then talk about things that suck! If ya don’t get the budget right, you’re messed!

20 Amy

Why do you only get paid once a year? How awful!

21 Echo

I’ve been paid weekly, bi-weekly, and now I get paid monthly. I much prefer getting paid bi-weekly, since monthly is sometimes a bit too long to go without getting paid. I have my mortgage set up on bi-weekly payments so I get an extra months’ payment every year. So when I was getting paid bi-weekly I didn’t notice much extra money since the mortgage payment was still coming out.

22 krantcents

If that works for you, great! Do you realize that you are missing out on putting the extra to work each month?

23 Amy

In my household, we’re both technically bi-weekly but our paychecks are offset so a check is received once a week. It’s pretty awesome because I just need to make the checking account stretch for another week. We’re not good with the budgeting. Usually the extra paycheck goes towards happy fun time – this year, they’ll have to go straight towards college tuition.

24 Mercedes

I’ve always had a bi-weekly paycheck and those months that I get third paycheck I either use it pay down some debt or put it towards savings. I don’t allow myself to think “oh I’m getting extra this month so I can spend extra!” I budget for my two paychecks a month that I typically receive and anything above and beyond that goes towards one of my goals.

25 Rebecca

My husb gets paid every two weeks and I hate it! We have a hard time budgeting for things in those longer months and although it seems like we should be able to save those “extra” paychecks, we never do. I do the budget and bills and would love to be paid monthly.

We just recently came up with a solution of sorts. All of my husband’s paychecks go straight to savings. Then at the end of the month I pull out our normal budgeted amount for the next month, about $3000 to cover mortgage, food, gas, everything. On those three check months, we automatically add to our savings because our budget is set for a two check month. Most of the time it helps just because I can get “paid” when I want to, at the beginning of the month. We have only started doing it, but it is making my life much easier. I get paid at the 1st of the month, then pay all the standard bills online. I pull out gas and grocery money in cash, and date night money if allocated. There is a little left over in the checking account to pay bills I have to do manually later in the month. Otherwise we work off the cash we have till the next month.

26 Jenna

Definitely a fan of the Booya-extra-money budgeting plan.

27 Executioner

I’d prefer twice nightly.

My wife and I both get paid bi-weekly, on offsetting weeks.

The solution to the bi-weekly budgeting problem is to switch your accounting to a longer perspective. Don’t budget per month. That’s arbitrary anyway. Budget for the whole year. Start a spreadsheet of your expected future income and expenses. Enter every expected paycheck, every expected bill, every expected transfer to or from savings, etc. Then revise and modify things as they happen. If you like, you can create columns for “expected” and “actual” to see how you are doing. It takes some time to set up at first, but as you go get used to this method of budgeting and accounting you’ll find it’s easy to project 6 months, 9 months, or a year into the future with relative accuracy.

If you’re still hung up on the monthly thing, then take an account of what actually happened at the end of every month. You can then run averages over a 12-month period and smooth out the 13th and 26th paycheck.

28 Christy

I was paid twice a month for 10 years and we just switched to every two weeks this year. I like it better as there is never a long stretch between cheques. My husband gets paid every week.
Since our mortgage goes out weekly, I don’t notice a huge jump because of the extra cheque. Usually a 3 cheque month is also a 5 week month so more money goes out towards gas and groceries. I also tend to budget in two week increments. That being said April is a 3 cheque month for me, so I am hoping to pay a little extra on my car.

29 eemusings

I get paid fortnightly and pay rent fortnightly. So really, this supposed three paycheck thing doesn’t make a difference to me.

30 LaTisha @FSYAonline

It would be nice to get an extra check twice a year! However, I work part time right now so I get no such perk. I would take the extra money and pay down debt.

31 Kristin

Rent and cable/internet is due the first of the month, cell phone and other utilities at midmonth, credit card closes out near the end of the month, and I’m paid bi-weekly with insurance payments coming out of my paycheck. I pay everything as soon as I get the bill, otherwise it weighs on my mind, but it makes it tough to sit down and do it all just once! At the beginning of the year, I did try to sit down and plan out my supposed expenses for the year. However, I am hoping to go to grad school in the fall and that will change my income situation drastically and would probably necessitate a move. So full-year housing/utility/moving/travel costs were all way up in the air, and I just gave up and budgeted for two paychecks a month.

32 LP

I only get paid once a month. It’s both blessing, and a curse… On the one hand I get to pay all my bills at once and be done with it, on the other hand, if I don’t have a tight rein on my budget, I can my whole check spent mid month and really have nothing until I get paid again.

I would love to go for the yay extra money strategy. The only time I have extra money is when I get paid right before Christmas, and get a bonus. The downside is that I have to make that money last until the end of January.

33 Brian

I used to get paid every 4 weeks, not monthly, but every 4 weeks. This is all good and well until the month comes along where pay day fell in the first couple of days of the month and 4 weeks later, we were still in that month. To handle this, the company would push the next pay check out 2 weeks, meaning we had to wait 6 weeks between paychecks. I’m not sure how people living day to day handled it, but having sufficient savings certainly helped. Budgeting for an extra pay check is cake compared to that.

My wife is taking 1 graduate class in the fall and 1 in the spring. Payments are due right around the date of the extra pay check and are pretty close to the amount of the check, so we just take the extra check and pay for the class with it. Works out really nice for us. Before that, I used to just stick it in the bank and not think about it.

34 Gus

I get paid weekly. I do my budget weekly. For monthly expenses (like mortgage), i put 1/4 of the repayment into savings each week, and it just gets taken out on the monthly cycle. For credit cards, if I’m paying the minimum (eg: on a low interest card), i try to schedule a payment of 1/3 of the monthly bill each week.

I used to pay only 1/4 of the monthly amount each week, but one day a bank charged me a late fee due to the timing of the payments vs when they expect the minimum to be paid – 26 days into the month. I pointed out that they are charging me $39 late fee, when I had paid them more than enough – just one payment was a day early. While they refunded it, this way i don’t even need to worry about due dates anymore, and i’ll always be ahead.

35 Den

We get the extra checks in April and October too – funsies! We use the extra check in April to fund summer camping trips and the extra check in October for Christmas gifts – simple, but works out great!

36 Justin

This is a good plan for the well disciplined. We are going from bi-weekly back to the 15th and last day of the month, which honestly I still prefer. I want to know how much money I have at all times, I equate this to trying to get a zero tax refund!

37 Crystal @ BFS

We pretend it doesn’t exist and then just divide it up with the rest of the monthly extra when it does. Right now that means it gets divided between the Emergency Fund/Savings account (25%), the Extra Cash for Investments account (35%), the Vacation account (20%), and our two individual Fun Money accounts (10% each).

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