May 28, 2023

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Monthly budgeting is the most common form of budgeting for personal finance. But is it best for you? The answer to that question depends on how often you get paid.

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bi-weekly pay cycle

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Bi-weekly pay cycles are a common frequency for salaries in the United States. Companies that pay on a bi-weekly basis release paychecks every other week.

If you’re paid on a bi-weekly basis like millions of other American workers, you probably get your paycheck every other Friday. It can also occur on other days of the week, but Friday is most common.

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The strange thing about bi-weekly pay is that it doesn’t really follow a monthly schedule. Twice a year (and once in a Blue Moon, thrice a year) you get three paychecks instead of two.

There are 26 payrolls in a bi-weekly pay cycle instead of 12 for a monthly pay cycle, or 24 payrolls for a semi-monthly pay cycle.

That 25th and 26th payroll cause budget disturbances.

Flow of bi-weekly pay dates

As the year goes on, your payment date changes to the first month in relation to the due date of your bills, until you are able to leave the paycheck as it has gone so far.

This phenomenon makes monthly budgeting problematic for those with bi-weekly wages.

For example, in March of this year my second paycheck falls on the 24th of the month, and I won’t get paid again before my mortgage is due. So I will specify the amount from my 24th March salary to pay this bill.

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As of May, my second paycheck is due on the 21st, and in June my first paycheck is due on the 4th. Fourth The grace period for my mortgage is within the payment date requirements. So technically I could skip paying it on May 21 and send those funds to my savings account instead.

By creating a budget with each payment date planned for the year, you can clearly see where those payment dates begin versus due dates, and where you can drop the pay checks.

A plan for every dollar

For those of you who have bi-weekly pay cycles, a monthly budget doesn’t allow you to decide what to do with every dollar, each pay period.

It can be confusing as to when should you pay the bill – this paycheck or the next? By mapping out several months or even a year’s worth of paychecks at once, you can create a plan and know when to pay each bill.

A bi-weekly budget allows you to play down how you spend each paycheck. A budget with this type of accuracy will allow you to maximize loan payments or savings, whichever you are prioritizing.

When I was a poor single mother and living paycheck to paycheck, this type of budget saved my life. I had to be super knowledgeable about how and when to pay my bills to rack up my extra dollars. Those extra dollars fed us every month.

If you come from a min-max culture of customization (I’m looking at you, the gamers and athletes), you’ll love the bi-weekly budget. It’s an uber strategic tool that will let you customize your heart.

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Creating a Bi-Weekly Budget in Excel

Creating a bi-weekly budget in Excel is really easy. I like to use columns for salary dates. The easiest thing to do is to type your next payment date in the first cell. Then type = cell reference + 14 in the cell to the right of it.

So if you enter your payment date in C3, type =C3+14 in D3. It will automatically calculate the date in 14 days – the date of your next paycheck!

Copy that formula by dragging the bottom right corner of the cell to the right, and you can quickly pop up payment dates for the rest of the year.

bi-weekly budget excel example

Now you know when you’ll get paid each month for the rest of the year, and you can strategically decide when each bill should be paid. And even better, decide when you can save the extra dollar.

Should you budget on a monthly or bi-weekly basis?

The answer is that you should budget using whatever method you want to track your personal financial goals and meet them.

If you are paid bi-weekly, bi-weekly budgeting can be a game-changer for you. If you are not paid on a bi-weekly basis, I do not recommend bi-weekly budgeting for you.

How do you currently budget?

I’d like to know your thoughts and experiences on time-frame budgeting. Share in the comments below!

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