The Advantages of a Biweekly Budget
You Get a Bonus Paycheck Each Month—And Save Big
Most traditional employees get paid once every two weeks, or what most people refer to as bi-weekly. If you are one of these kinds of employees, the best budgeting strategy is to assume you get paid biweekly, even if you don't.
Many workers (especially those who work in sales, including real estate agents) receive a standard biweekly paycheck. However, some months, these employees wind up with three paychecks. That's because they receive a bonus check based on commission. If you fall into this category, you receive a bonus check either on a regular basis or sporadically.
Either way, the bonus check constitutes a huge windfall, and you need to take advantage of that. You can use the extra cash to pay off debt, save for retirement, save for that condo you want, or beef up your emergency fund. You can also save for major purchases such as a new dishwasher, your next car, or a family vacation to Europe.
Below are some things you should know that'll help you reach your desired savings goal if your budget like a biweekly employee.
Create a Budget That Assumes You Get Paid Biweekly
This makes sense because you need to take care of essential bills first. These budgeting worksheets will help you figure out how to budget biweekly, whether you get a paycheck two times, three times, or four times a month.
Make sure you include every single purchase and expense within your on-going budget. Be sure to include your regular savings amount which traditionally is 20 percent of your monthly income. View that savings goal as though it were a necessary bill like your utility bill, rent payment, or mortgage payment.
Assuming that you get two paychecks a month (and many months you will get only two paychecks), create a budget that covers the following essentials:
- Your rent/mortgage
- Health insurance, life insurance, and car insurance
- Money set aside for car repairs and home repairs
- Money set aside for retirement savings
- Savings for your kids' college education
- Savings for holidays
- Savings for medical bills and co-payments
- Savings for replacing your laptop and other digital devices
You get the idea. Use the budgeting worksheets to go through all of your expenses so you don't forget anything. Try to include irregular expenses (e.g., your annual gym membership) as well as your normal ones.
Put Your Savings Away
Now that you know what regular expenses and savings you need to include in your budget you won't feel like you "need" that extra third paycheck. Because there aren’t any bills you need to catch up on, you can put the entire bonus check toward another goal. Put it into your retirement account, or build your emergency fund, or put it into a sub-savings account that’s labeled for a particular goal like replacing your appliances.
This is one of the best ways people who get paid biweekly can amp up additional savings and still stay within a budget. If you follow the biweekly way of budgeting, you won't feel deprived and you'll soon have a new car.