How do you budget for expenses and financial goals? It’s no secret that many Americans live paycheck to paycheck. While that’s not the best way to manage your money, you can make the most of it if you get paid bi-weekly.
If you get paid bi-weekly, most of your bills are monthly and you set a little money aside as a checking account buffer, you can use a bi-weekly budget to your advantage.
Here’s how.
Budget On Your Bi-Weekly Checks Only
Be sure to base your monthly budget off your bi-weekly checks only. This should be easy to do seeing as how it’s practically a given that you should base your budget on your income.
However, when you’re paid bi-weekly, you may realize that some months, you’ll get an extra paycheck if it’s a longer month. I think you’ll get at least 2 extra paychecks during any given year.
If you base your budget solely off the two paychecks you get every other week, you won’t really be depending on that extra money. When that extra income comes in, you can use it to help you meet a financial goal whether that means making a lump sum payment on your debt, increasing your savings balance, adding to your retirement fund, and so on.
It Helps to Have Some Savings Set Aside
When you’re using a bi-weekly budget, it helps to have some savings set aside in case you need to fall back on it. The money you save can sit in your checking account as a buffer which is different from putting your money in a savings account like an emergency fund.
How much you save can vary depending on your needs and current budget. For example, a college student with fewer expenses may feel fine with setting aside a $500 checking account buffer when a family of four may want to keep $1,000-$2,000 in their checking account as a buffer.
A checking account buffer can help you when any unexpected or annual expenses pop up and you don’t want to use a credit card. Having that money already set aside to fall back on will also help you put your extra paychecks to good use instead of working them into your normal budget.
Get Into the Habit
When you’re using a bi-weekly budget, it helps to make it a strict habit so you don’t rely on any money from outside sources or extra bonuses. Once your expenses are set and you’re able to stick to your budget, you can make good use of any extra money you earn or receive even if it doesn’t come from your extra paychecks.
If you have side hustle income, earn bonuses, get a raise or receive some birthday or gift money, it won’t be money that you’re depending on to live comfortably so you can use to get ahead financially instead.
Lower Your Expenses
Naturally, we feel inclined to spend and plan out how we’ll spend any money we earn or receive. I know that when I receive money like a check or cash that I wasn’t expecting, my mind instantly starts planning out how I’ll use the money.
If you find yourself doing this too, make sure you lower your expenses so your bi-weekly income will be enough to cover your basic needs and wants. While you can’t afford everything, you can budget in a category for miscellaneous purchases so you’re not waiting all year long until you get an extra paycheck to pay for little items around the house.
You can lower your expenses by doing a number of things. You can refinance your high-interest debt to save money, cut your grocery spending by purchasing more ingredients and whole foods instead of processed foods, compare insurance rates and switch providers, use more public transportation or walk or ride a bike during warmer months.
You can also cut your internet, phone bill, and cable bill to trim your expenses.
Go through your budget line by line and assess each expense to see what you can cut. This is different for everyone. You just need to look at your necessities and values to see what’s important to spend money on and what’s not.
Maximize the ‘Extra Income’
When you receive your extra payments during longer months, it will seem like extra income and that’s fine. Just set goals for that ‘extra money’ and stay focused on those goals.
As I said earlier, you can use your extra paychecks to do things like pay down debt, boost your emergency fund, save for travel, fund your retirement, or even do something fun that’s a value to you.
The key is to maximize the extra income and make the most of it. You don’t want to blow your extra bi-weekly paychecks and splurge on things you don’t want or need. Many people who get paid bi-weekly don’t even realize they get paid extra during some months so it’s all about awareness.
If you get paid bi-weekly, I encourage you to try this method or budgeting and saving out to improve your finances.
Do you get paid bi-weekly? Have you ever considered this type of budgeting?
Chonce is a freelance writer who’s obsessed with frugality and passionate about helping others increase their savings rate, eliminate debt, and work toward financial stability. She chronicles her journey to becoming debt-free on her blog, mydebtepiphany.com.
