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Being paid bi-weekly means that you receive a paycheck every two weeks, typically on the same day—such as Friday. Depending on the year, you get 26 or 27 paychecks, which don’t exactly fit neatly into a 12-month time period. Then, you’re left wondering how to make your paychecks work in harmony to ensure all of your bills are paid.
I’ve always been paid every two weeks, and good thing is that there’s no secret sauce needed to make a budget. Whether you choose to budget weekly, monthly, or per paycheck (bi-weekly) it’s pretty darn simple to do once you have the basics down.
Halve your bills between paychecks
Since most bills are paid monthly, and you get paid twice each month, you will need to divide your paychecks in half depending on the total amount of your expenses. To determine how much you pay each month, write down all of your regular expenses.
This should include:
-Insurance (renters, auto, home, healthcare, etc.)
-Cable/Wi-Fi and phone plans
-Car payments and gasoline
-Debt payments (credit cards, loans, etc.)
-Utilities (gas, water, electricity, etc.)
So, if the total amount of your expenses each month is $1600 and you’re paid $1400 after tax every two weeks, you will need $800 from each paycheck to cover the costs. If your bill is not the same amount each month, gather your last three to four statements and find the average. From there, I recommend adding at least $10-$20 to the average amount just in case the bill is higher than normal.
For example, let’s say that your last four electric bills were:
The average would be $175. You can write $175 as the amount of your electric bill in your budget, or make it $195 by adding in an extra $20. By doing this, if your bill is less than $195 you have extra money available to offset any future bills that may be higher than what was budgeted.
What about the times we’re paid three times in one month?!
Those who are paid bi-weekly typically have two months in which they get three paychecks. First off, “oh happy day!” but this can make figuring out what to do with your budget confusing.
What do I do? Nothing.
I let the same amount I have withdrawn from each check be pulled from the third and use the funds as a buffer for those not-so-hot months. I also keep my personal funds the same.
Keeping everything the same makes things a lot less stressful, but here are a few things you can do with those extra funds:
- Pay down debt
- Deposit more into savings
- Contribute to a sinking fund for an upcoming expense
- Treat yo’ self…in moderation!
Open a “bills account”
Having one specific account for all of our bills is the shizz. I discovered that having multiple bank accounts makes your budgeting so..much..easier, especially when it comes to keeping your balances organized.
If you only have one account, you’re mixing your expenses and personal money which can cause you to use funds you shouldn’t have, ultimately shorting yourself. With separate accounts, you know exactly what the funds are to be used for and the balance lets you know how well you’re doing with those expenses.
That being said, open a (free!) basic checking account with the financial institution of your choice and deposit the amount you need from each paycheck to cover all of your expenses. This is super simple to do if your employer offers direct deposit. Simply add the new bank account and change your payment elections, this way the money is deposited into the account for you every time you get paid.
To turn it up a notch, put your bills on auto-pay and let the account do all of the work for you. Auto-pay or “automatic payment” is when you elect to have your bill automatically withdrawn from the account of your choice, eliminating the need to pay them manually.
My bills account is kind of like a set-it-and-forget-it type of thing because a portion of my pay is automatically deposited and my bills are automatically paid from the account balance. The only thing I have to do is check my balance from time to time, which stays at $2000 or above.
How? Over the years, the money from my extra paychecks (when we’re paid three times a month) and bills that have been less than what I budgeted for accumulated, thus giving me extra funds to work with. So long as you remain disciplined, this will also be your result which comes in handy when you get a new expense or the amount of a bill increases!
How to set your bills account on auto-draft:
- Go to the service provider/lender’s website and select “auto-pay” or “automatic payments.”
- Enter in your account number and routing number
Voila! It’s that easy. You may have to verify your account using the good ol’ “three amounts” cent deposit, but once verified you should receive confirmation that your payment is set up on auto-pay. If your service provider/lender does not offer the auto-pay option, you can set up your payment on “bill-pay” through your bank, which works the same way.
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Plan a month in advance for irregular expenses/activities
Once you have your budget set, you’re planning for regular expenses that fit comfortably within your income. An unexpected outing/expense could send your finances up in flames doused with gasoline. Trust me, I know.
Try to plan a month ahead for any extra activities/expenses in order to give yourself time to save and rework your budget to cover them. This way, you’ll know how much you need from each paycheck.
For example, if you know that someone’s birthday is approaching and you want to set a $40 gift budget then that’s $20 you need to squeeze from each paycheck. That $40 is a lot more reasonable when it’s stretched over a certain length of time versus trying to make it work last minute. Something is bound to suffer without those funds and it’s probably going to be you.
Save up the amount of one paycheck
When you’re paid bi-weekly, the dates on which you are paid may change but most bills are due at the same time each month. This means that, depending on when you started budgeting, you may have jussttt enough to cover all of your expenses. Like, making your payments by the hair on your chinny-chin-chin.
It takes some time to get the balance of your account steady, but by saving the amount of at least one of your paychecks you’ll have more flexibility and confidence because you’re ahead of your bills.
Now, when I say save the amount of your paycheck, I’m not talking about the full amount, just the amount you use for your expenses. Going back to the example I used previously, if you get paid $1400 but only need $800 for bills then you will just need to save $800.
Of course, not everyone has a chunk of money just sitting around waiting to be used (I sure don’t) so this can be saved gradually. Here are a few ways to give your saving a boost:
- Make extra money– If you haven’t heard of a side-hustle, then you have now! Basically, it’s something you do for extra money but it’s not your main squeeze (main source of income). This could be babysitting, a part-time job, selling baked goods, freelancing—whatever. Here are 10 easy ways you can earn extra money from home!
- Sell your old items– Whether it’s clothes, furniture, electronics, or just plain junk chances are there’s someone out there who will buy it. I normally post old items on eBay and they sell within 3 days! It’s a great way to clear out clutter and earn cash.
Where to sell:
-Craigslist (please watch out for Freddy Krueger)
- Cut/reduce expenses- This is the easiest and fastest way to free up extra cash! Whatever doesn’t serve you purpose, get rid of it. If the expense is essential, negotiate a lower payment or remove features to lower the cost. Doing this, I was able to free up an extra $350 in my budget!
So there you have it, budgeting when you’re paid bi-weekly. It’s not as daunting as it may seem, and once you get the hang of it then it will become an unconscious habit.