Financial Friday: Using Bi-weekly Pay Systems to Your Advantage

There are many different types of pay systems. Some people, such as restaurant servers and bartenders, are essentially paid daily. Other companies set-up their systems to have weekly pay periods. Most companies, mine included, pay bi-weekly. While others pay semi-monthly (LD) or monthly (my parents). Nothing is wrong with any of these systems, but how you are paid can definitely change how you should budget. Today, I am going to delve into the advantages of the bi-weekly system and how to budget for that kind of pay system.

How to Use a Bi-weekly Pay System to
Photo credit: jypsygen / Foter / CC BY-NC-ND

Even though people often get paid bi-weekly, most bills are still monthly. So, you should always budget to pay half of your bills the first pay period of the month and half the second pay period of the month in order to cover all your expenses. If you can’t do that with your paycheck, you are probably living above your means and should figure out ways to reduce your spending. So, for LD and I, we put half of the monthly mortgage payment into an account on the first payday of the month and the other half in on the second pay day of the month and then pay our mortgage from that account.

Now for the fun part. So far we have budgeted 24 pay days in a year, but with a bi-weekly schedule, there are 26. I like to use these “extra” paydays to put a chunk of money at once to our loan payments. For example, this month, I was paid on January 2, 16, and 30. All of my bills were paid using the money from the 2nd and 16th, so my last paycheck went completely towards loans. It could also go towards savings if you prefer that. When we go debt-free, my plan is to use those “bonus” paydays for going straight to my Roth IRA. However, you can put that money wherever it makes the most sense for your family.


About Danielle Beranek

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