How to Combine Bi-Weekly & Bi-Monthly Pay in Budgeting
When you are paid bi-monthly and your partner is paid bi-weekly, you may have a difficult time creating a monthly budget and covering all of your bills. The two differing pay periods makes it difficult to divide up the costs equally and you can run out of money to cover all of the bills without careful planning. A budget will help you manage your money and prevent any shortfalls at the end of the month.
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Instructions
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1
Determine your monthly income by dividing your bi-monthly paycheck in half and then adding two of your bi-weekly paychecks together. This will give you a baseline to work with and make it easier to plan for expenses. When you are paid bi-monthly put half of the money into savings to transfer into checking the month you are not paid. With this plan you will have four extra bi-weekly paychecks each year. You can use these to reach your financial goals or to save for something fun, such as a vacation or new furniture.
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2
Create your monthly budget by listing all of your expenses for the month. This includes your mortgage, food budget, utilities, gym memberships, car payments and insurance costs. Anything you normally spend money on should be included in the budget, as well as occasional or annual expenses. To include your annual expenses divide them by 12 and budget that amount each month.
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3
Add the total of your expenses and compare it to the monthly income number you got in Step 1. The budgeted expenses should be less than the total of your monthly income. If it is not you will need to cut back your expenses until they are equal to your monthly income. If necessary, you can budget for your annual expenses by setting aside the money from your four extra paychecks to cover the expenses, but this means you cannot use the money for other reasons.
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4
Track your expenses each day and subtract them from the appropriate budget category. Once you have spent all of the money in the category for the month you need to stop spending. You can transfer money between categories if you find that you have gone over on an essential category and you have extra money in another category.
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Adjust your budget the second month. The first month of budgeting is usually off in a few categories, because you incorrectly estimated the amount for some categories. Make the necessary adjustments, while staying below your monthly income level.
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Tips & Warnings
Computer software or using cash for your transactions can make tracking your budget easier. If you are budgeting with a spouse you will need to meet every day or two to review your spending in each category for the first few months. Once you have adjusted your spending and lifestyle, you can meet weekly to review the budget.
References
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