How to Budget When You Get Paid Bi-weekly

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In 2022, the US inflation rate rose to an all-time high in 40 years.

Since then, the high inflation rate has led to increased prices in almost everything, thus decreasing the purchasing power of money.

And this has not changed, which calls for spending less or getting another source of income in order to live comfortably.

Therefore, you must account for every dollar, especially if you receive a bi-weekly paycheck, as you can go through these funds quickly. To help you with accountability, here is how you can budget your bi-weekly income to ensure that you do not incur debt to cater to pressing unpaid bills.

Euro money are taken out of the wallet on light gray background

Understand Your Income

A bi-weekly paycheck means you get paid every two weeks—26 times per year—while a monthly paycheck is only 12 times per year.

And that’s the beauty of a bi-weekly paycheck as you get paid an extra 2 weeks, which comes in handy when you want to pay off debt faster, like credit card bills.

But a bi-weekly paycheck still has its own drawbacks as shown in the table below.

Pros	Cons
More frequent financial check-ins	Challenges with cash flow management
Enhanced budgeting discipline	Irregular expenses may be harder to manage
Easier alignment with bi-weekly expenses	Potential difficulty in meeting monthly obligations
Opportunities for mid-month adjustments	Less flexibility with irregular income
Increased awareness of income and expenses	Limited ability to save from each paycheck
Opportunity to pay down debt more frequently	Reduced ability to save large sums over a short period

Also, you still need to know your net income—money you take home after deductions.

These deductions include taxes, healthcare, retirement plans, or any other deductions your employer makes from your salary.

Therefore, review your pay stub or consult your Human Resources department to find accurate figures.

Additionally, do not forget that you may have some irregular income now and then.

So, include the irregular income you receive, no matter how small it may be, into your budget, as it has the potential to pay off a bill or two.

For example, irregular income includes that $50 a friend or relative may give you as a gift or to buy yourself lunch, or even bonuses and commissions that you may earn in a specific period.

Unrecognizable woman writes down monthly bills in notebook with calculator and coffee on the table

List All Your Expenses Including Debt

Your bi-weekly budget needs to have the exact or near approximations of your expenses.

But there are three types of expenses, and you need to understand what they all mean.

For starters, fixed expenses are constant. You pay these bills weekly, monthly, or yearly and the amount you need to pay remains the same each time.

These include

Rent or mortgage payments
Utilities like electricity, water, and WiFi
Insurance for health, auto, home, or any policy you have
Debt like student loans, car loans, or credit card bills

Then there are variable expenses whose exact amount always changes like:

Groceries
Transportation costs
Entertainment
Dining out
Travel
Hobbies
Shopping

Lastly, there are savings, which is an expense you are putting money aside for future use but it is still deducting money from your immediate use.

How to Save Easily on a Bi-weekly Paycheck

The amount you save is proportional to how much you earn and depends on the reasons.

But whatever the case, you can automate it as a fixed amount or a percentage of your total income.

Is it to do the following:

Buy a car or house?
Go for a vacation?
Pay off debt?
Build up an emergency fund that caters to unforeseen costs like medical expenses, car repairs, house repairs, and even job loss?
Create a sinking fund for anticipated future expenses like paying off your bills, travel, and making expensive purchases like a car, apartment, gadgets, or designer clothes?

Or as a cushion for a rainy day, if you unfortunately lose your job, you can still pay your bills without borrowing from friends or taking out a loan.

But, you need to work on your financial discipline, to create a saving culture, which takes time and effort to master.

So, have a specific amount you want to save in a month, then divide that figure by two since you get paid bi-weekly.

And as Warren Buffett said, “Do not save what is left after spending, but spend what is left after saving.”

Calculate the amount you need to save from your net income rather than what you have left after paying off bills.

Tips on Spending Less While on a Budget

If you are struggling to pay recurring bills like food before the next payday because you saved money first, adjust some expenses to spend less as follows:

Consider switching to a cheaper cell phone plan.
Bundle your home and auto insurance or look for cheaper coverage with the same or better benefits.
Consider moving to a smaller home or apartment or finding a roommate.
Get rid of unused subscriptions, cook at home more often, take public transportation or carpool, and buy used clothes and furniture.
Cancel unnecessary memberships like Netflix if you never use it.
Get another job or start a side hustle.

Monthly budget planning sheet with pen and wallet

Create a Bi-Weekly Budget Plan

After you have a clear picture of how much you earn and spend, it is time to create a bi-weekly budget plan as follows:

Determine how much you will be saving every month and make the payment immediately after you get the alert from the bank.
Know which bills to split into two.

For instance, rent usually takes the largest amount of income for most people. Therefore, you should split this in two.

However, you should ensure you factor in the rent due date so that you do not incur late charges while waiting for your salary check.

Have an estimate of the variable expenses such as groceries, transportation costs, entertainment, and dining out. When you first start using a budget planner and tracker, it may be difficult to estimate variable expenses, but with time, it becomes easier.

To be on the safe side, always set aside a higher amount for variable expenses. For instance, if you have been using a tracker and you determine that, on average, you spend $100 on groceries every week, set aside $120.

Why?

Because you may find that prices for most products may go up in a specific week and then drop in the next.

When you have all the required data, fill in your income and expenses in the budget tracker.

Also, include a column for balance on the bills that you have split, as you will find it easier to track your spending.

Then, include any money you may have brought forward from the previous paycheck.

For instance, check your wallet, purse, and bank accounts and sum it all up. On the income side of the budget, input it as money brought forward (B/F).

This will increase your income totals. But if you had no money left, instead you had racked up a debt like a credit card bill waiting for the next payday, include the amount on the B/F section but add a negative sign (-) before the amount.

For example, if you had a credit card bill of $200, at the next payday, input it as -$200. This will deduct from your income, and you should then use this money to pay off your credit card debt.

Woman counting her money on her bed with cellphone as her calculator and her laptop

Monitor and Review Your Budget

A budget enables you to allocate funds more accurately so that you live comfortably before the next paycheck comes in.

You can still make adjustments once you have created a bi-weekly budget and started using it.

For example, if you find that you pay the same amount for transportation, then tag this expense as a fixed one and not a variable.

Additionally, you will be able to figure out which expense tracking method works for you.

The best way is to log in an expense after you make it and then compare the actual spending and budgeted amounts before you sleep.

But if that doesn’t work for you, you can do everything all at once at the end of the day, as monitoring your finances will help you understand the following:

Are you staying within your allocated limits?
What can you adjust in order to stay under budget and not incur debt?
Is the budget planning working for you?

Then, when you are editing the next bi-weekly budget, you can make adjustments accordingly to help you stay on track with your finances.

For instance, after creating my first budget tracker, I realized that inputting funds for groceries as a whole was confusing for me.

So, I adjusted my budget planner to have specific groups of groceries like fruits, vegetables, herbs, rice, pasta, bread, cereals, dairy, eggs, meat and seafood, beverages, snacks, and treats.

This was a game changer that made me love using my budget planner more.

Therefore, make adjustments to whatever works for you. Remember, any kind of budgeting should become a lifestyle, not a one-time activity.

expense tracking concept using a budgeting app on woman's phone and coffee on wooden table

Tips for Successful Bi-Weekly Budgeting

Making a budget can be difficult, but to make it easier for you, here are tips that have proven successful for us.

1. Use budgeting apps, Google Sheets, or Excel.

You can track your money more easily and get a full picture of your financial situation thanks to technology.

Mint, Goodbudget, and EveryDollar are some of the best free budgeting apps for keeping track of your finances.

You can also use the pre-designed templates on Google Sheets or Excel that you can customize to suit your specific budgeting needs.

2. Automate all your fixed expenses to ensure you do not miss any payments.

Even if you are splitting it into two, automate it still with the exact amount you need to pay. This will help you not to incur any late fees and penalties that eat into your income.

3. Use the envelope system to keep track of your variable expenses especially if you prefer paying them using cash. If not, you can use apps with the envelope system, like the Goodbudget app.

An envelope system helps you set the exact amount you have budgeted for these expenses.

For example, if you plan to use $50 for eating out, you will take the exact cash and place it in an envelope labeled “Eating Out”. Then whenever you are going to eat out or order food, you pick the cash from this envelope to pay for the bill.

Later, you should return the change, if any, in the envelope. And when the funds run out, you simply do not incur that expense until the next paycheck.

4. Save money whenever you can by buying your groceries in bulk, taking advantage of discounts and reward programs, learning how to cook instead of eating out, or starting meal prepping.

5. Build emergency and sinking funds as a financial cushion for irregular and anticipated expenses.

6. Plan for windfalls.

Windfalls can be bonuses, tax refunds, or unexpected extra income.

It can be tempting to use any unexpected cash you receive to overindulge yourself, but instead of splurging, allocate these funds towards your financial goals.

You can transfer them into an emergency or sinking fund. Or you can pay some fixed expenses like rent, internet, or utilities in advance.

Conclusion

Budgeting is a fantastic strategy for achieving financial success as you are able to track where your money is going.

And as Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” Therefore, by creating a budget with a bi-weekly paycheck, you effectively monitor your finances by allocating them wisely.