One of the advantages of getting paid bi-weekly is your ability to get ahead on your bills. Not everybody will agree that this a good idea, because that money could be used for other things. Such as investing, saving or fun stuff.
But if you’ve ever had an issue being able to pay your bills, whether it was due to job loss, small paycheck due to unpaid time off or whatnot…then this might be right you. One of the most stressful things in finances is when you just don’t have the money to pay you bills, aside of course from being able to buy food and necessities.
I’ve had that problem myself a few times in the past and it pushed me to find a solution.
The first thing I did was to figure out the average amount of each bill, since some bills can vary each month.
Utilities (power, heat) Bill
The total for the whole year (by adding each of the last 12 months) is $1,730. Divide the total for the last year by 12 months 1,730 ÷ 12 = $144.16. Then for the bi-weekly amount, divide the monthly average by 2: $144.16 ÷ 2 = $72.08.
So if I paid $72.08 with each bi-weekly paycheck, then it should be enough to cover for the more expensive months. Obviously there would be a credit to the account, especially if I start in the months with the lowest usage. This is good if you’re wanting to get ahead on your bills.
The Extra Paychecks
But wait a second—if I get paid bi-weekly that means there are 2 extra paychecks each year, what’s up with that? Good observation. haha That’s how you get ahead. By making bi-weekly payments with each paycheck, you should be able to get one month ahead on your bills each year. Sorta like an emergency fund for your bills.
You could also do the same with your rent or mortgage payments, although for the mortgage payments…it would most likely be applied to the principle. Which means you would be paying down your mortgage quicker and saving a lot of money in interest.
We’re not paying off our mortgage early, so I’m sure that’s not the best route for everybody else. There are other options out there. You could just pay your bills bi-weekly and then shove the extra rent/mortgage into your savings, Roth, investment account or use it to help with debt.
The important thing is that each bi-weekly paycheck is treated equally. This keeps you from spending more than you probably should and gives you leverage over your money.
There really is a lot you can do with your money and your budget, sometimes you just need to get creative.
How do you budget your bi-weekly paychecks?
Have you ever done or considered something like this?