How to Split Paychecks to Pay Bills

The most common pay cycles for employees are weekly, biweekly, semi-monthly and monthly. Generally, bills are due monthly. An entire paycheck direct deposited into one account can make for confusing budgeting, particularly if the individual is not financially disciplined. To pay his bills accurately and conveniently, an employee might decide to split his paychecks. Although the gross (before taxes) and net (after taxes) pay remain the same, separating paychecks is an effective means of budgeting.

Instructions

1. Determine the amount of money you need to set aside for your bills each pay date. If you are paid weekly, keep in mind there are 26 weekly pay periods in a calendar year. While most months have four weekly pay dates during the year, two months have five weekly pay dates. Figure your bills total for the month and allocate a portion of each weekly paycheck toward that amount.

2. Open a separate checking account for your bills only. Many banks offer free checking accounts, which have no maintenance fees and no required balance. Simply deposit the exact amount of money you need into that checking account. Once all your bills are paid for the month, if your balance is zero, there is no penalty.

3. Keep in mind that some companies charge a payment-processing fee. When deciding how much of your paycheck to allocate to your designated checking account, include those fees (if applicable). If you fail to add associated fees, you risk your account becoming overdrawn, which can result in costly bank and merchant fees.

4. Complete your employer's direct deposit form, authorizing the company to split your paychecks. Some companies allow you to allocate money to as many as four accounts. Note that some companies may have a limitation on how many accounts you can have for direct deposit because the bank charges fees for each direct deposit transaction. On the direct deposit form, state the bank name, account and routing numbers, and the amount you want allocated to each pay period.

5. Double-check the bank information before handing it in to your payroll personnel. If the account number or routing number is entered correctly into the system, it can cause a delay in your direct deposit, interfering with your bill payment schedule. Attach a voided check, which has the account and routing numbers printed on the bottom to the direct deposit form to avoid these errors.

6. Ensure your pay stubs reflect the split. Your pay stub should show the amount deposited into the designated account.

References

• Woman's Divorce: Tips On Budgeting Your Paycheck