How to budget when you're paid every two weeks

Most budgeting advice starts with "take your monthly income." If you're paid every two weeks, you don't have a monthly income. You have a paycheck every 14 days, and rent that's due on the 1st whether a paycheck landed recently or not.

This post walks through a way to budget that starts from your pay schedule instead of the calendar month.

Why biweekly pay is awkward

Every two weeks means 26 paychecks a year, not 24. Every month has at least two paydays, so most months get two paychecks and two months a year get three. (Every so often the calendar lines up so there are 27 paydays in a year, which adds a third three-paycheck month.)

That's different from being paid twice a month, for example on the 15th and the last day. That's 24 paychecks a year, always two a month. Those days can move when they fall on a weekend, depending on your employer.

Either way, your bills don't care. Rent, a car payment and your phone bill are usually monthly, on fixed dates. Some weeks you're flush and some weeks you're waiting on payday with little left.

Budget by pay period, not by month

The fix is to give every bill to a specific paycheck:

1. List your paydays for the next two or three months.
2. List every bill with its due date, including annual and quarterly ones like car insurance.
3. Give each bill to the last paycheck that arrives before it's due. Rent due on the 1st belongs to the paycheck before the 1st, not the one after.
4. Subtract. Each paycheck minus its bills is what that paycheck leaves for groceries, gas and everything else.

If a paycheck's bills add up to more than the paycheck, that's where the stress comes from. You'll need to set aside money from the paycheck before it. Seeing this in advance is most of the value.

Look past the next payday

A common mistake is to count only the bills due before the next payday. Here's why that goes wrong.

Say today is the 20th and you have $900. You're paid $1,500 every other Friday: the next payday is the 27th, the one after that is the 10th. Your bills:

Only the phone bill is due before the next payday, so it looks like you have $840 to spend. But if you spent $840 today, you'd have $1,500 after payday and rent would take you to −$300 on the 1st.

The lowest point before the payday after next is $400, on the 5th. That's the real limit. If you also want to keep a $100 cushion, you can spend $300 between now and the 10th, not $840.

This is how safe to spend works in Pennykite: the lowest projected balance from today until the day before the payday after next, minus your cushion.

Plan for the three-paycheck months

If you build your budget around two paychecks a month, the two extra paychecks a year are money you haven't spent yet. Decide in advance what they're for. Common choices:

• Build or top up an emergency cushion.
• Put the whole paycheck toward a debt. The debt-free date calculator shows what an extra payment does.
• Cover the big once-a-year bills, so they don't land on a normal paycheck.

Keep it up to date

A plan only works if the balance is current. Once a week, update your balance and check that the bills since last time actually came out. Mark anything that's already cleared so it isn't counted twice.

Try it with your numbers

The paycheck budget calculator does the pay-period math for free, with no sign-up. If you want a calendar that keeps doing it, Pennykite projects your balance for every day and keeps your numbers in your browser, not on our servers.

This is math, not financial advice. It's only as accurate as the paychecks and bills you put in.