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The Half-Payment Budget Method

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Living paycheck to paycheck is something that burdens the vast majority of Americans. If this is your situation, saving and getting out of debt seems impossible.

woman calculating monthly home expenses

You’re constantly running out of money days before the next payday and covering monthly expenses with credit cards. There is never enough cash in your wallet to treat yourself without feeling remorseful.

You want to get out of this cycle, but you don’t know what to do or where to start. You feel like, to do so, you need to make more money. Can you relate? Don’t you want to see the light at the end of the tunnel?

Budgeting is the core concept of healthy finances. Saying goodbye to this toxic relationship with money can be easy if you are determined and willing to put effort into managing your income. The phrase “the more you have, the more you spend” is absolutely accurate, a higher salary doesn’t necessarily equal healthy finances.

Even folks with a six-figure salary are stuck in debt. By properly and orderly handling your wages, you will be able to live within your means, lessen or completely eliminate debt, save, and therefore, have a stress-free life (at least monetarily).

There are many budgeting methods and tools to help you regain control of your finances. The Half-Payment Budget Method disperses your money more evenly throughout the month so that you are able to cover your bills and have enough left to spend on other necessities or be prepared for an emergency.

What is the Half-Payment Budget Method?

The half-payment method allows you to take your regular monthly bills and divide them in half, setting money aside to make the payment in full on their due date.

graphic image budget planning concept

Picture this scenario: You get paid twice a month. At the beginning of the month you make a list of your bills, putting them in order by date. With your first paycheck, you cover the ones due on or before the mid-month. This leaves your wallet completely empty and you incapable of affording other needs, like groceries and gas.

When your second check finally comes in, you pay the remaining expenses, but this time there’s some cash left. You have two options: You either stretch that amount to last you enough to cover your expenses until you get paid again, or since you have been deprived of spending money, you end up wasting it on something you didn’t need, or worse, overspending.

Using the half-payment method splits up your money evenly over the month so that all your bills are paid without overwhelming any single paycheck.

This way, your pockets will no longer be emptied before the following payday. This is a straightforward and secure way to track your earnings and how you spend them. It sounds like something that you can handle, right?

What are the Pros and Cons?

With the half-payment Budget Method you will be able to:

  • Spread your expenses throughout each payday, even if you get remunerated twice a month or weekly (just divide them in quarters instead of halves).
  • Live without having to stretch every penny, waiting anxiously for your next check.
  • Never again have red numbers on your banking accounts.
  • Plan and pay your expenses without feeling daunted.
  • Cover any emergency or even treat yourself because you’ll have some spending money.
  • Never again rely on your credit card to cover your bills (unless there is an emergency, which is exactly why one gets a credit card in the first place). 
  • Know exactly how you are handling your paychecks, so you won’t be tempted into overspending.
  • Feel relieved from the burden of big payments (like mortgages).
  • Get out of debt faster and save.

The benefits outweigh the disadvantages, but we’ll list the cons anyways:

  • This budgeting method demands organization and discipline. So don’t touch the money you set aside!
  • You will need to get at least half a month ahead to begin. Taking the plunge and splitting everything into halves right away is not recommended.
  • This might not be the best system for you if you get paid once a month.

Where to Start?

First, you need to evaluate if this method works for you. If it does, it’s advised that you start during the pay period with the least amount of bills. Pick just one bill to begin with. You don’t want to overwhelm yourself.

You can slowly add more bills in the subsequent periods until you’re certain you’ve got the hang of it. It should take you only a few months to feel like you’ve gained control of your finances.

accountant business woman using calculator and computer laptop

The best way to set aside the money is completely up to you. You can put it in specialized envelopes and save it until the due date comes, you can deposit it in a holding account, or you can make early payments. Just remember, it’s not spending money.

Check with your creditor to see if there are any penalties (like fees) before you make any prior or multiple payments. If there are none, these early deposits might protect you from the temptation of using that cash for something other than paying recurring bills.

You can also set bi-weekly payments for things like car payments or mortgages. Remember: Discipline is crucial to succeeding in this system.

Making two monthly payments on utilities could be an option as well, especially if you’re on a fixed-rate plan.

Now, take your recurring monthly bills and divide them in half. Pay the ones that are due on the first half of the month.

Set aside half of the amount for the ones due on the second half of the month. When they once again reach the date at which the payment is required, take the first and second halves and pay them off. That’s it!

If you’re successful in being controlled and well-organized, the half-payment budget method could help you put extra money towards the following month’s bills and get ahead on your expenses. Now that is a great compensation, isn’t it?


Let’s say you have a monthly income of $2,400. Your recurring monthly bills are as follows: $800 for mortgage and $300 for car payments, both due on the first of every month; $175 for utilities (gas, water and electricity) due on the 10th; $115 for auto insurance; $90 for cable/internet, due every 15th; and $230 for your student loan due on the 20th.

accountant checking a report graph computing

With the average method, your budget would look something like this:

Mid-month: $1,200 paycheck

•    $115 – auto insurance

•    $230 – student loan

•    $90 – cable/internet

Total payments due: $435

Remaining amount: $765

End of the month: $1,200 paycheck

•    $800 – mortgage

•    $300 – car payment

•    $175 – utilities

Total payments due: $1,275

Remaining amount: -$75

Whoa! You’re starting a new month in the red! In this scenario, you’d have to plan ahead and set aside some of the mid-month paycheck to cover the end-of-the-month expenses. Otherwise, you would be left stressing about your financial situation and/or having to seek aid from credit cards.

Instead, if you decide to follow the half-payment method, things would look like this:

Mid-month: $1,200 paycheck

•    $400 – mortgage

•    $150 – Car payment

•    $60 – Auto insurance

•    $85 – utilities

•    $45 – cable/internet

•    $115 – student loan

Total payments due: $855

Remaining amount: $345

End of the month: $1,200 paycheck

•    $400 – mortgage

•    $150 – Car payment

•    $60 – Auto insurance

•    $85 – utilities

•    $45 – cable/internet

•    $115 – student loan

Total payments due: $855

Remaining amount: $345

Much better, right? Your expenses are equally dispersed, so you will no longer find yourself living paycheck to paycheck. And with time, you’ll be able to start saving, and eventually waving goodbye to debt.

businessman using laptop at work

The Bottom Line

Getting In the habit of dividing your bills in half every month will help you develop a healthy relationship with your money. This method’s predictability is a great aid in teaching discipline and financial order. If you don’t become well-organized with the way you handle your earnings, the system won’t work.

Don’t forget to write everything down on a notebook or excel sheet. Just estimating how much you have left is setting yourself up for red numbers.

Making the right changes to reach your goals is key. The benefits attained will be worth the sacrifice of breaking the bad habits: less stress, learning to curb unnecessary spending, and distributing your income smartly. As any other budgeting tool, its ultimate goal is for you to reach financial freedom.