New Job, New Pay Schedule: How to Budget for Different Pay Schedules

Managing money is hard enough but can be challenging in different ways depending on when you get paid.  Here are a few ideas on creating a budget depending on whether you get weekly, biweekly, or monthly paychecks.

In the same way we learned to find common denominators in middle school, we need to start with a common starting point to work around.  Since most of our big expenses like rent, mortgage, utilities, and credit card payments are due monthly, let’s start with that as a baseline.

🤔 Figuring out your budget

1️⃣ First, let's figure out our monthly income. It’s easy if you only get one check per month.  All the other pay scenarios, multiply your paycheck by the number of pay periods and divide it by twelve.

For example, if you get paid $1,000 a paycheck and get paid once a week then…
$1,000 x 52 weeks = $52,000 / 12 months in a year = $4,333 (your monthly income)

2️⃣ Now put together a list of monthly expenses and add them up (or create your own customized Budget in the Fruition app).

3️⃣ Find any irregular expenses that might occur during the year, like a vacation or taxes.

4️⃣ Calculate the amount you want to set aside for savings, emergency funds, and investments (retirement, college funds, etc.).

Now that you've got your monthly income, expenses, and savings in front of you, let's review the challenges found in each pay cycle (weekly, biweekly, monthly) and strategies to make the most out of every paycheck.

⚖️ How to optimize for your pay schedule

Weekly

Weekly paychecks are the easiest to manage for regular expenses like groceries and entertainment but require planning ahead for larger monthly expenses.

• Build your budget around receiving four paychecks during the month and use the extra paycheck you get four times per year for savings and debt reduction.

• Depending on the size of your paycheck, you may need to use part of your first and last paychecks each month for your housing expenses.

• Use your second and third paychecks for utilities, credit card and loan payments.

Biweekly

Biweekly paychecks can be a challenge because most months you get two paychecks, with a third paycheck two months of the year.

• Build your budget around only getting two paychecks per month.

• Use the extra two paychecks as bonuses to build up savings or reduce debt.

• Split the monthly expenses between your two checks with the first paycheck being used for rent, mortgage and utilities and the second being used for bills like credit cards and loans.

Monthly

Monthly pay is the easiest when it comes to regular bills, but can be the most challenging when it comes to stretching out the budget for four or more weeks.

• Pay all monthly bills as soon as you get paid.

• Calculate roughly what you would need for weekly expenses like groceries and entertainment.

• Review your spending mid-month and adjust accordingly.

• Any money not spent should we set aside in savings as a cushion for future months.

✅ Tips and tricks for any budget

When it comes to budgeting, we’ll take any help we can get. Here’s some helpful tips we like to keep in mind:

• Use automation whenever possible.

  • You can ask your bank or payroll provider to set a portion of each check to savings that can be drawn down as needed throughout the month.

  • Set up your bills to coincide with your pay schedules. While your rent or mortgage payments may not be flexible, most insurance or credit card providers can move their payment dates to certain days of the month.

• Build up a savings buffer of at least a month for those times your bills and payments don’t match up and to handle unexpected expenses.

• Set up targeted savings for irregular expenses like taxes, medical deductible and car troubles.

• If you know you will be switching jobs or payroll cycles, try to set as much aside in savings for the short term to build flexibility while you are working through your new budgeting.

Successful budgeting is more about creating a system that works for you rather than the number of times you get paid.  Like our middle school teacher showed us, the size of the pizza is the same, the only thing that changes is the number of times you slice it.

Need further help? Download the Fruition App from the Apple App Store or create an account today to schedule a call with one our mentors to the best way to set up your budget.