Most bills are due on the same day every month. This can be awkward when you're paid every two weeks because your paydays fall on different days each month. Budgeting monthly bills with biweekly pay isn't difficult, but it does mean you have to get organized and stay organized. A biweekly pay schedules means you'll have two months each year with an "extra" paycheck. Debt Wave Credit Counseling warns not to make the mistake of thinking of this as a bonus. These additional paychecks should be part of your budget planning.
Draw up a list of your monthly bills. These typically include:
- Mortgage or rent payment
- Auto, health and home insurance premiums
- Credit card and other debt payments
Add everything up. If you have bills that are paid on a different schedule rather than monthly, allocate a portion and include it in your monthly bill total. For example, if you pay annual property taxes, add 1/12 of the yearly tax to your monthly bills. Set this money aside each month and you'll have the full amount on hand when the taxes come due.
Determine your day-to-day expenses -- things like food, gasoline and household supplies -- on a biweekly schedule. Use receipts from your grocery and other everyday shopping to estimate how much you spend every two weeks. Allocate an amount you can afford for non-essential spending, such as entertainment.
Calculate a biweekly budget. Divide your monthly bills from Step 1 in half and add the estimated day-to-day expenses from Step 2. If your monthly bills total $2,500, half equals $1,250. If your day-to-day spending for two weeks comes to $800, your biweekly budget adds up to $2,050.
Allocate monthly bill payments in advance. For example, if payday falls on August 28, the portion of this paycheck that you must set aside for bills takes care of payments due in the first half of September. The paycheck you get on September 11 is earmarked for bills due in the second half of September. Keep in mind that the bills allocated to each paycheck probably won't be equal. Bills for the first half of the month might total $1,600 and those for the second half might be $900. Set aside the extra from the pay period with the smaller allocation to use in the next pay period.
Put any pay amount over and above the biweekly budget into savings in some form, such as an emergency fund for unexpected expenses. Taking this precaution will enable you to stick to your budget when life throws you a curve.
Decide what you want to do with your "extra" paychecks. Every six months or so, the shifting dates of a biweekly pay schedule result in three paydays in a month. All your monthly bills are allocated to two paychecks. The portion of the third paycheck that would have gone to pay bills can be spent for any purpose. You have a few options:
- Use the extra paycheck to pay down a credit card balance.
- Add the money to your savings account.
- Put the funds in an IRA
- Set the cash aside for a special project like buying a new car, going on a vacation or remodeling your home.
If your biweekly budget is more than your biweekly paycheck, review your expenses to see where you can make some cuts. If you spend more than you make, you'll end up living off of credit cards or borrowing money just to make ends meet.