If you are new to every other week paychecks, you may be wondering, what’s the best way to budget for biweekly paychecks and monthly bills? You may be surprised just how simple it really can be.
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How to Create a Biweekly Budget with Monthly Bills
What makes biweekly budgeting a little special is that your pay days are are going to be on different days of the week every month.
Getting paid biweekly, means you are getting paid twenty-six times a year.
Occasionally, depending on how the calendar falls, it can be twenty-seven, but for planning purposes– twenty-six.
That means twice a year you will be getting an extra pay check. We’ll talk more about what to do with these paychecks later in the article.
So how do we make monthly bills and biweekly paychecks work together?
Let’s check out what you need to be successful with your new budget!
Step 1: Create Your Monthly Budget Categories
Getting paid once a month, twice a month, every week it doesn’t matter. You need to know where your money is going, so start by listing out your monthly expenses including due dates.
Groceries. Utilities. Mortgage payment. Gas. Insurance. Car Payment. Cell Phone. Internet. Haircuts. Clothing. Gym. Credit Card debt payments.
Once you know what money you need you will be in great shape to get yourself and your money organized to rock your month!
Step 2: Organize Your Bills and Expenses Utilizing a Bill Pay Calendar
Google Calendar is a fantastic free tool to help keep your finances organized and on track.
I use it daily to help me stay on top of the rest of my daily life and budgeting is no exception.
Part of it is that the visualization really helps me understand what’s happening in each month, but also the bonus of getting the email reminders so I don’t forget due dates and how I’ve allocated funds in my budget.
If you want to get a jump start with getting your money organized be sure to grab your very own budgeting and bill pay calendar.
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It’s a great way to get a snapshot of your overall budget for the month and an easy way to check for places your month is out pacing your money.
If you are looking for a biweekly budget template one is included in the Dollars that Make Sen$e workbook.
This budgeting workbook was designed specifically with biweekly budgeters in mind. It includes over 88 pages of tools, trackers and more to get ahead with your money.
It also includes a monthly budget based on biweekly pay template made in Google Sheets (or Excel if you prefer are available).
Be sure to check it out if you are ready to move to the next step with your finances.
Step 3: Create a Zero Based Budget for Each Paycheck
With a zero-based budget, you’re going to look at your income and expenses and give every dollar a job to meet your financial obligations and reach your financial goals for the future.
When your paycheck comes in, you are going to assign 100% of your income to an expenses or category until you have planned out every dollar.
Before you start getting panicky, please realize that just because your budget is planned down to zero, doesn’t mean you are left with zero dollars at the end of that paycheck cycle.
Rather it means you are utilizing every penny to it’s maximum and most efficient potential.
Something else to think about is to consider breaking larger expenses into 2 payments. Expenses like your mortgage payment.
It can help keep a more even budget across the month when you create half payments for large expenses– this method is called the half payment method.
Super simple. Super effective.
Step 4: Track Your Bills & Discretionary Spending
Once you’ve organized your expenses, I highly recommend you open a separate checking account just for your bills and a checking account for the rest of your spending money (discretionary spending).
Your income happens at different times every month making it a challenge to accurately plan ahead for future bills.
Having a separate checking account for your fixed and variable expenses ensures that you have a place to:
- Hold money for future payments. This is helpful especially if you like to split payments between paychecks for larger expenses like rent or your mortgage.
- You don’t accidentally spend money that you had set aside for bills– keeping you on track.
Another option for holding future payments (also called sinking funds) is to set up separate savings accounts.
A great option for this is CIT Bank savings builder high yield savings accounts offers a little higher than the average savings rate, there are no maintenance fees and you can maximize your savings with daily compounding interest!
The goal of these extra accounts is to give better visibility over how you’ve earmarked your money and to avoid you having to rely on credit cards to bail you out due to issues with tracking your money.
Step 5: Tracking your money
Tracking where your money has gone is typically where most people get frustrated and bail, but this is a super important step in sticking with your budget and subsequently meeting your personal finance goals.
One of the reasons I really love having my bills in a separate checking account from discretionary income is that I always know that the money in my second (discretionary account) is where I really need to focus my tracking and I know I’m not in danger of spending money I need for my bills.
Some people really enjoy the 50/30/20 Budgeting method because they can give themselves permission to spend that 20% of wants any way they like and they call it good.
People who are on tighter budget can do well with cash budgeting and using envelopes. This form of budgeting makes it really hard for you to accidentally overspend categories.
No matter where you land with your tracking tactics, it’s important that you have one and are consistent so you can win with your money!
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Bonus: What Else You Need to know about biweekly budgeting
Why you should consider saving up to cover a month’s expenses…
A goal of mine is to save up enough money for a month’s worth of expenses. I can’t imagine too many things more stressful than living paycheck to paycheck. Getting a month ahead helps to alleviate the stress for a few reasons.
First, you won’t be getting paid on the same day of the month every month, but typically bills are due at the same time every month. So, if you are a month ahead, you will always have the money ready to pay bills as they are due regardless if you are getting paid during the first or second week of the month.
You have the flexibility to pay when it best works for you and the due date versus being forced into a certain window because of your ever-changing pay date.
Second, peace of mind. If anything unexpected pops up you have time to adjust for that change.
A word of caution– this is not a free for all pot of money. The purpose of this fund is to maximize your flexibility in paying bills. This is also not an emergency fund.
Check yourself, before you wreck yourself!
When you are planning to get a month ahead. You don’t necessarily need to save a months worth of salary– you just need to save enough to cover your necessary expenses.
The point is to have the money to cover next months bills.
I have a baseline budget that consists of just what I need to get by. It doesn’t include entertainment or eating. It doesn’t include any money that I don’t absolutely need.
You want to make sure you have the money for rent, utilities, cell phone, etc. Anything above necessities is a luxury and those are things you could forgo if the money wasn’t there.
Related Biweekly Pay Article: Saving $5000 in 26 weeks
How to help you get ahead of your monthly bills….
If you are on a super tight budget there are tons of options to help yourself get ahead.
Temporarily cut back on other discretionary spending.
- Pick up a side hustle: dog walking, lyft, babysitting, mother’s helper, etc.
- Sell stuff. Check out Ebay, Craigslist, FB Marketplace, or hold your own garage sale.
- Online surveys. Some of my favorite are Swagbucks, Survey Junkie, and Inbox Dollars.
What to do with your 2 extra biweekly paychecks during the year?
As I mentioned above twice a year you will get an extra payment.
Here is a list of a few ways you could use those paychecks to get ahead in your financial goals:
- Pay down debt
- Save up to get a month ahead for expenses.
- Put money away for retirement.
- Add extra to your sinking funds: new car, vacation, home/auto maintenance, etc.
- Pay an insurance policy (auto, home, life)
- Grow your emergency fund
- Pay/plan ahead for irregular expenses.
Pitfalls with Budgeting Biweekly paychecks
There are a few areas you need to be aware of when you are trying to balance getting paid every other week.
The Two Extra Paychecks. As I mentioned above, your occasional third paycheck isn’t intended to be a free for all, so much as a potential windfall to help you get ahead. Don’t squander the opportunity.
Failing to plan for the month. You need to be diligent about laying out your whole month, so you don’t run out between payday. This is why I strongly recommend using a calendar to really visualize where and when money needs to be spent.
How do you budget bi weekly? Any tips or hacks to share? I’d love to hear from you, please comment down below.