Receiving your salary on a biweekly basis is great since you get more money in your bank account more often, but it means more planning is required when thinking about how to budget. So how to budget biweekly pay?
Biweekly pay implies that in the space of a year, you will receive a paycheck 26 times. Most of the budgeting methods out are set up based on you receiving your pay every month. With most of the costs based on monthly payments, ensuring you have a good plan and know how to budget when you get paid biweekly is key to achieving your financial goals.
Of course, biweekly pay shouldn't mean you can't start a budget, only that you should take a slightly different approach. The same happens if you get paid weekly. So let's check how to budget biweekly pay.
How To Budget Biweekly Pay?
There are a few steps in this process. To budget your money correctly every two weeks, you need to know how much money you have to disburse each week, create a list of all your expenses, distinguish the costs that are essential from the non-essential, split your expenses into two categories, prioritize the bills and cut what is not essential. You should also create financial goals, plan for significant, unexpected events and irregular expenses, and save in advance.
1 – Know How Much Money You Have To Spend
You will have to spend money from your revenue sources, including your regular salary, additional part-time work, or side hustles in your spare time. Knowing the amounts or at least close estimates and expected paydays will be essential for successful budgeting.
Remember to make standard deductions when figuring out how much money you should receive. This includes tax, insurance, or any other deductions that should be taken from your paycheck, as those will still apply in the same way as with monthly adjustments but taken in smaller amounts from every paycheck on a biweekly basis.
2 – Make A List Of All Your Expenses
As with every budget, you need to have an idea of what you expect to spend and the dates those will need to be paid to ensure enough funds are in your account to cover them. Make a list of all expenses you expect to pay during the month. As a guide, you can use previous spending using bank statements and/or receipts.
When making your list ensure to include all of the expenses, even the smaller ones, as they can add up and make a bigger difference when you are paid biweekly.
3 – Know What Expenses Are Essential And Non-Essential
Biweekly pay can be a double-edged sword. Sure, you get your money more regularly, but you might have less money available at any given point compared to monthly pay. This means you might not be able to cover all your monthly expenses in one go. Thus, knowing which expenses are essential, those you cannot live without, and non-essential, which are those you can live without, will be vital when trying to understand how to budget biweekly pay.
Examples of essential expenses, also known as needs, will include mortgage/rent, and utility bills such as gas/electricity/water or groceries. Non-essential expenses, also known as wants, will consist of a gym membership, entertainment subscriptions, or other entertainment-related spending.
You can then allocate money appropriately when creating a plan for your spending to ensure your essential costs are covered first and identify any non-essential spending that can be deferred to ensure enough funds are in your account.
4 – Split Your Expenses Into Two Categories
On average, receiving your paydays biweekly means receiving a paycheck in the first and second half of the month. This can be helpful when planning your monthly expenditure and matching this with your income.
I found it very helpful to split my expenses in two, based on which half of the month they happened. This meant labeling those paid between the 1st and 15th day of the month and those paid from the 16th to the 31st. I then used this as a guide when trying to match income and expenses.
5 – Prioritise Your Bills
You will now need to look at your previously created list of expenses. Identify essential bills, such as housing costs or bills. You need to ensure you always have enough in your bank account left to cover your bills, and you don't fall behind when receiving your pay biweekly, with bills usually paid on a monthly frequency.
Falling behind with any essential payments, which usually have a contract attached to them, might entail an adverse credit history footprint and additional charges. Ensure you know all your bills that will be due and the exact days when they are due.
6 – Cut What Is Not Necessary
Think back to all the spending you can live without, which you have identified earlier – is there something you forgo? Equally, you can consider any essential spending you can reduce, for example, changing your energy supplier, renegotiating the tariff, or shopping at a cheaper grocery store.
When looking at how to budget when paid biweekly, you will definitely look at your expenses with more detail with the time sensitivity that comes with ensuring you have enough money in your account for upcoming payments. Use this chance to your advantage, analyzing your expenses to ensure you spend your money wisely. You can also try the extreme budgeting method if you want to cut most of the unnecessary expenses.
7 – Create Financial Goals
When it comes to sticking with a budget, having a goal in mind that you can work towards will motivate you to keep at it and ensure you see through those tough times when you feel like giving up. Having a financial goal will also ensure you won't potentially use up any ‘spare' money left after you cover all of your expenses on things that you wouldn't otherwise do so.
A financial goal might be to do with future spending, saving, or debt repayment. For example, you can aim to spend more for a pleasant holiday in six months or save for a house deposit. You can also look to pay down your mortgage as quickly as possible or finally pay off your student debt. Whatever it is, make sure it is something you really want to achieve and work towards.
8 – Plan For Big Or Unexpected Events
With biweekly pay, your bank account balance might be lower compared to those who receive their compensation on a monthly basis. So planning for a big or unexpected event like a car breakdown will be critical to ensure you don't find yourself in financial difficulties caused by insufficient funds to fall back on.
One way of going about it will be to create an emergency fund which you will be able to use in case of any unexpected event. The money should be available instantaneously and should not be planned to go towards any other expenses as part of your budget.
To build an emergency fund when receiving your biweekly pay, try setting a monthly goal that you can then use to split into smaller commitments amount and save from your biweekly pay. Building it should take overall the same amount of time as with a monthly salary, but the biweekly contributions will be smaller than one monthly contribution.
9 – Don't Forget Irregular Expenses
Planning for any irregular expenses like Christmas celebrations, birthdays, or any special events like Valentine's day should be done across a few paychecks, like with bigger bills which are paid monthly. You should try to estimate the amount you will need for those expenses and divide it by twice more than when planning monthly to account for double the amount of paycheck within a period.
If you plan well ahead, you can decide to put money aside for irregular expenses every other payday. For example, if you are planning your Christmas spending nine months in advance, you might be able to put money aside every second payday for the next nine months to be able to fulfill your spending needs.
An important point to note, however, is that making a reasonable estimate of the spending that will be needed will be vital. Closer to the spending time, you might find yourself with fewer opportunities to ‘catch up' for the spending needed as you might have limited spare funds on a biweekly basis to do so.
10 – Save In Advance
When it comes to paying a monthly expense avoiding losing your whole biweekly paycheck to one larger bill is important to not run out of funds, but it requires planning. The best thing I found to do is to split the bill into two equal parts and put money aside with each biweekly payday to ensure spreading the cost of that bill across a month.
A great example is rent or mortgage payment. If you pay $900 each month, you should split the payment into two equal parts of $450 and aim to put aside that much with every biweekly paycheck you receive. This way, your monthly expenses won't hurt your account balance much when it is time to pay them.
Common Questions About How To Budget When You Get Paid Biweekly
Is It Better To Budget Biweekly Or Monthly?
Even though budgeting on a biweekly basis might require more planning in advance, it also allows you to stay on top of things better as you review and plan everything on a more frequent basis. For some people, it is not a choice but forced by the employer. However, biweekly budgeting might be helpful for people on a low budget or those worried about their spending habits.
How Do I Make A Biweekly Budget Spreadsheet?
You will want to open a new spreadsheet and set up your income and expenses parts as well as any other sections, including debt, savings, and investment, by listing and adding them up per category by totaling the numbers. You will then take away all your costs from your income by using subtracting or summing up formulas and adding any other visual analysis per your requirements.
How Much Should You Save If You Get Paid Biweekly?
The best way to work out how much to save if you receive your pay weekly is to set your monthly or yearly goal and divide either by two (average amount of paydays every month, with two months having three paydays) or 26 (total number of paychecks you will receive every year). You will then have a biweekly figure that you will have to put aside from the paycheck you receive biweekly.
Why Is Biweekly Pay Better?
For some, it may not be a choice, but receiving your payments on a biweekly basis ensures that you receive the money you have earned more often and improves your cash position as your bank account is topped up with cash every other week. It is also great when starting a new job as it means you won't need to wait for a whole month or longer for your first paycheck.
Receiving a biweekly paycheck doesn't mean you can't budget; however, it requires slightly more planning. You will need to have an idea of when and how much you are getting paid in order to match your expenses. Missing this trick might mean you will get into financial difficulties. You may not be able to cover your expenses due to a lack of money in your bank account until the next payday.
When I was budgeting biweekly pay, a thing I found very useful was spreading out my expenses across the month. When I signed new contracts or talked to my utility providers, I would ensure that due dates were spread out across the month. This guaranteed my bills weren't all going out at the start of the month, which is useful when receiving your salary on a monthly basis.
Hopefully, you now know how to budget biweekly pay and have a plan you can follow. Remember that you might struggle at first, especially if you are used to receiving your salary on a monthly or even weekly basis before. But most importantly, do not give up; review and readjust as needed on a biweekly basis until you get it right.
Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.