Setting up a biweekly budget
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Bi-Weekly Budgeting | The What, Why, and How

Are you ready to take control of your personal finances? Making a budget and sticking to it is one of the most effective ways to make sure you’re keeping track of where your money is going, but it isn’t always easy for those who get paid biweekly.

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That doesn’t mean you can’t be financially successful – in fact, setting up an effective biweekly budget can help ensure that every paycheck goes further and all bills get paid on time. In this blog post, we’ll cover the what, why, and how of biweekly budgeting.

What is Bi-Weekly Budgeting

What is a biweekly budget

Managing your finances can feel like a daunting task, especially when your paychecks arrive on a bi-weekly basis. It may not seem like a huge difference at first, but when 10 months out of the year bring you two (2) paychecks while the remaining two months provide you three (3) paychecks, it’s essential to have a budget plan in place that accommodates these nuances.

The key here is to create a biweekly budget that takes this pay schedule into account. Keep your budget flexible, allowing for adjustments depending on whether it’s a two or three-paycheck month, and you’ll be able to enjoy the benefits of your unique pay schedule without any financial stress weighing you down.

Why Budget at all?

I get it, budgeting can sometimes feel overwhelming or even too much of a hassle, especially when we’re always on the go. But let me tell you why it’s worth the effort.

Budgeting has the potential to bring a sense of control and stability to your financial life. When you’re aware of your spending habits and understand where your money is going, you start to make smarter decisions with your hard-earned cash.

It helps you save for a rainy day, plan for future goals like vacations or home-buying, and (the best part) it reduces our stress around money matters. Not to mention, by sticking to a budget, we can avoid falling into debt or living paycheck to paycheck.

So, why not give a monthly budget a try? You might be surprised at the peace of mind and clarity it can bring to your life.

Who Should Consider Bi-Weekly Budgeting

Father with his children

If you get paid biweekly you aren’t alone. Did you know that you’re part of the 36.5% of Americans who share the same pay period? This quirky little fact makes you the perfect candidate for biweekly budgeting.

If you have avoided creating a budget because of the way you get paid, I’m here to help you out. After creating a biweekly budget, you’ll find it much easier to manage your expenses based on your income while also staying accountable for your spending. Not only will it help you keep track of your bills, but you’ll also find yourself saving up for those special splurges without feeling guilty.

So, if you’re in the biweekly paycheck club, get out your pen and paper and give a biweekly budget a try – it might just be the financial game changer you’ve been looking for!

What Budget Plan Should You Use?

Diving into the world of budgeting can feel a bit overwhelming at first, but fear not, my friend! There are different budget plans available, and it’s all about finding the one that works best for you.

One popular option is budgeting by percentage, where, when you create a biweekly budget, you allocate certain percentages of your income to different categories like housing, groceries, and entertainment. This approach can feel more comfortable and manageable, as it automatically adjusts based on your income level.

Another budgeting method worth considering is a zero-based budget, which involves assigning every single dollar a purpose, leaving no leftover money unaccounted for. This strategy might be a little more time-consuming, but it’s perfect for those who want complete control over their spending. So, take a moment to explore these options, and pick the one that makes the most sense for your lifestyle and financial goals.

What about the 2 months where you get paid three times?

Use a calendar to see when you get paid

I have been personally getting paid every other work for the last 15 years and this is the best part about getting paid biweekly. The magical third paycheck twice a year!

So what should we do with this gift of money we get every 6 months? I find that it is far too difficult to attempt to add it to my monthly budget. Trying to spread one paycheck out over 6 months and not end up in a difficult spot can be tricky.

Instead, I find the best way to use this “extra money” is either a great way to bump up your savings, or a way to get ahead of your debt payoffs. The key to allowing you to use this money however you want is to create a buffer in your checking account. Having an extra month of expenses in your checking account.

How to Set Up a Bi-Weekly Budget

Computer and budget planner

Now that we have all the basics down, let’s take a look at how to set up a bi-weekly budget step by step. Get your excel spreadsheet, pre-printed budget forms, or pen and a blank sheet of paper out and let’s get to it!

Identify your income sources

Before diving into the details of how to budget biweekly, let’s begin by determining how much money you make each month. For people paid biweekly, income comes in the form of two paychecks per month, for ten months out of the year.

We’ll use these two regular paychecks as the foundation of our base budget. To keep things organized, we’ll categorize them as “paycheck 1” and “paycheck 2,” effectively creating two separate budgets each month.

While this approach might seem a bit over-complicated at first glance, trust me, you’ll become a pro at this style of budgeting after a month or two.

Separate all your expenses into two different biweekly budgets

The next step is to separate your bills into what will be paid with paycheck 1 and paycheck 2.

Look back at your previous month’s bills and write down on a calendar when each bill was paid.

Any bill that is paid in the first 2 weeks of the month will be paid with paycheck 1 and will go on your first biweekly budget.

Anything that comes from week 3 until the end of the month will be paid with paycheck 2 and will be placed on your second biweekly budget.

I know this seems annoying, but this is really the worst part of making a biweekly budget. Now that you have that out of the way let’s go to calculating your income.

The main issue with getting paid every 2 weeks is the time of the month when you get paid will be different from month to month. This makes it very important that you keep a bit of a buffer in your bank account to deal with these variations.

What expenses to include?

Biweekly budget expenses

How you separate your expenses will depend a lot on the budget you choose. The way you divvy up expenses with the 60/30/10 budget compared to the 30/30/30/10 budget is much different. The important thing is that you catch them all.

Here is a list of common monthly expenses to include in your biweekly budget! These include both monthly fixed expenses as well as variable expenses.

  • Mortgage Payment
  • Monthly housing costs
  • Utility Bills
  • Insurance
  • Groceries
  • Debt Repayment
  • Health Care
  • Child Support
  • Cell phone
  • Cable
  • Internet
  • Travel
  • Dining Out
  • Streaming Services
  • Memberships
  • Other Non-essential monthly bills
  • Retirement accounts
  • Investing accounts
  • College savings plan
  • Save money for a down payment on a house
  • Real estate investments
  • Emergency Fund

Calculate your net pay for each bi-weekly period

Calculator and pen for budgeting

Now that we have our expenses figured out, let’s move on to your biweekly paychecks. Each month we are going to be getting 2 paychecks, and then twice a year we are going to get an extra 3rd paycheck. For now, we aren’t going to worry about the months we get three paychecks. It isn’t consistent enough to factor into our biweekly budgeting plan. If you want to know my personal thoughts on what to do with the magical third paycheck scroll back up.

For this part, we are going to go back to our monthly budget calendar and mark when and approximately how much we are going to get paid for each pay period. This will create an easy way to visualize when our money comes in, and where our money is going each biweekly pay. It also makes it much easier to transfer your budget to a budget planner.

Make sure you are using your net pay as gross pay isn’t going to help us much. Expenses like taxes and health insurance are already baked into our budget and not much we can do about them.

So now you should have a calendar that is going to make actually writing down a budget much easier. Let’s move on.

Transfer your data from the Budget Calendar to your Preferred Budget Template

We are now going to transfer the information we have collected onto a Biweekly Budget Template. If you already have a template that you like great. If you need a budget planner I have one for download below to get you started. I just ask for you to sign up for my email list. I won’t email you much, just things I genuinely think you would be interested in. Unsubscribe at any time.

Simply copy what you wrote on your calendar to your budget template, either the First Biweekly Budget or the Second Biweekly Budget.

If you find that one of your budgets doesn’t cover the bills for that biweekly budget, then you are going to have to do some borrowing from the previous budget. Let me show you an example to help you better understand this.

A Quick Example

Let’s say you make $1,000 every two weeks. At the beginning of the month (February), you have to pay your Mortage, Car Payment, and Electric Bill and that equals a total of $1,100. What are you to do?

As long as you aren’t over-extending yourself for your entire budget, you will need to borrow “leftover” money from the second budget of the previous month (January). Hopefully, you only spent $900 out of the $1,000 on your second budget, so you will have an extra $100 to cover your bills in the new month.

What do I do after my budget is complete?

Congratulations! You have completed your first biweekly budget and should be proud, you’ve taken the first step in taking control of your finances.

After the first month or two you should have a fair idea of how accurate your budget is, as well as how well you are staying on track. If you find yourself struggling to stick with your budget, don’t fret you aren’t alone. Let’s look at some things that can help you stay on track.

Track all spending to ensure accuracy

Just because you have a budget doesn’t mean you’re going to magically meet all your financial dreams. The hard work isn’t finished yet. You need to stay focused and track your spending to ensure that your biweekly budget is accurate.

Simply review your budget compared to your bank account statement. This should only take a few moments each 2-week period. If you notice discrepancies between the two be sure to fix the issue. This is why leaving some extra money in your budget is a good idea when first starting off.

Identify areas where you can cut back or save more money

Now that you have reviewed the accuracy of your biweekly budget, you can now see where you may have overspent. This is where a budget really starts to shine, you are now going to be consciously aware of your spending habits!

At first, budgeting can be intimidating and discouraging. Yet by taking an honest look at your spending habits you can begin to create a plan that works for you.

Don’t let the newfound realization of your spending habits scare you away. Just go line by line, look at what you budgeted for, and then how much you actually spent. Then just ask yourself a few questions.

  • Was this a normal month for this type of spending?
  • Can I cut back on how much I spent in this category?
  • Can I borrow money from another category to cover my spending?

Be honest with your answers. There are no right or wrong answers, this is a personal budget for you. Use the budget as a guide and don’t beat yourself up too much.

Set financial goals to help keep yourself motivated and on track with saving

Setting goals for long term success with budgeting

Sticking to a budget can sometimes feel like a daunting task, but a fantastic way to stay motivated and focused is by setting clear financial goals and keeping track of your savings.

When you have measurable objectives in mind, it becomes easier to prioritize your expenses and see the bigger picture of where your money is going.

Remember to keep your objectives realistic and attainable, and as you track your progress, you’ll start to see the benefits in no time. Plus, acknowledging your hard work and the milestones you reach can be incredibly rewarding!

Make adjustments to your budget as needed, depending on whether it's a two or three-paycheck month

It’s natural to want to reach the financial goals you’ve set for yourself and it can be tough when your budget is feeling the squeeze. But if you are needing some extra help, why not try utilizing those two three-check months a year?

Instead of seeing them as additional pay ‘to spend’, make use of that money by putting it towards a saving goal like creating an emergency fund or setting aside money for a holiday. Reaching your savings goals will become much easier with these “extra paychecks” throughout the year.

This will allow you to reduce your savings category each month and use it elsewhere in your biweekly budget. Hopefully providing much-needed relief to you and your budget.

Automate payments when possible so that bills are always paid on time without extra effort from you

Automated payments can be a great way to simplify the payment process and free up mental energy. You don’t have to write checks or remember when the money needs to leave your account – it is all handled automatically, reducing stress and allowing you to focus on other areas of life.

Just remember to remain vigilant in monitoring your payments and how much is coming out of your account each month, it can serve as a great financial tool for achieving bigger goals.

Monitor progress regularly to ensure that you're staying within budget and making steady progress toward reaching financial goals

Once you have been budgeting for a few months, you should be getting the hang of it. But the work is never done! By regularly monitoring your progress, you can make small but significant adjustments to ensure your budget remains on point and your dreams remain in sight.

Establish a habit of touching base with your budget and financial goals, taking note of your progress, and celebrating your small wins along the way.

Staying involved with your finances and seeing your goals being achieved is a fantastic way of maintaining focus. To stay inspired, celebrate the small successes as you make progress toward your bigger objectives.

Common Mistakes People Make with Their Budgets and How to Avoid Them

Mistakes like dropping your icecream

Not accounting for irregular expenses

Many people forget to include one-time or irregular expenses in their budget, such as annual insurance premiums, car repairs, and home maintenance costs.

To avoid this mistake, create a separate category in your budget specifically for these types of expenses so that you can plan and account for them when they come up.

Underestimating the cost of living

People often underestimate the amount of money they need each month to cover basic needs like rent, groceries, transportation costs, etc., resulting in an unrealistic budget that is difficult to stick to.

Taking a few minutes to review and revise your budget each month can help you stay on top of your finances, so be sure to include it in the planning process for each new month.

Failing to track spending

Without tracking your spending habits it’s impossible if you are staying within budget or not! Make sure you set aside time every two weeks to review where all your money is going so that any adjustments can be made quickly and easily before things get out of control financially speaking!

Ignoring savings goals

Without saving goals, you can easily get into a situation where the majority of your income is dedicated to day-to-day expenses. Shopping on impulse can be tempting, but thinking of your long-term goals first will help you put funds into savings while still allowing yourself some spending money.

FAQ

faq

Is it better to budget weekly or biweekly?

It is best to budget according to how you are paid. Though having a weekly budget can be easier, it is also more time-consuming as you will be making a new budget each week of the year. A biweekly budget can be more difficult to set up initially but should require less time to set up each month. My suggestion is to default to the budget that matches how you receive your paycheck.

What is the 50 30 20 rule biweekly?

The 50 30 20 rule biweekly budget consists of 3 categories. Split your pay into 50% needs, 30% wants, and 20% savings and debt repayment. Review your budget regularly for necessary adjustments.

Do you save more budgeting weekly or biweekly?

Weekly and biweekly budgeting should net you the same amount of savings. When being paid biweekly there will be 2 months out of the year when you receive an extra paycheck, which can help boost your savings.

How much of your paycheck should you save biweekly?

This will mostly depend on the budget plan you are following but as a rule of thumb, most experts suggest between 5-20% of your income should be put towards saving goals.

Are you taxed more when paid biweekly?

Taxes are based on your total gross pay for the year and has nothing to do with how often you are paid.

Where can I get a bi-weekly budget template?

Funny you ask! Because you can find a bi-weekly budget by scrolling up and joining my email list. I promise I wont send you spammy emails, just new posts I think you will appreciate!

How often should I budget?

You should review your budget at least once a month and make adjustments as necessary. More often will cause burnout, and less often will likely cause you to veer off course of your budget.

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