Why You Should Try The Half Payment Budget Method

Many people are paid bi-weekly, but are stuck thinking of their budget as a “monthly” thing. The half payment budget method was created for people who are paid twice monthly, and it solves SO many problems!

Living paycheck to paycheck just seems to be your way of life when you are paid biweekly. You want a way out but can’t find anything that works for you…

If you’ve tried and failed (over and over) to create a monthly budget that works for you, the half payment method may just be the thing that changes everything!

Regardless of income, so many of us live paycheck to paycheck and have a hard time allocating enough money for fixed bills vs discretionary bills month to month. You’re not alone in this struggle!

I wore those shoes and walked mile after mile in them, that is, until I discovered the half budget payment method. ]

It’s an easy way to pay ALL of my bills on time and still end up with money left over each paycheck!

If you are looking for a way out of the paycheck to paycheck cycle and are paid biweekly, the half payment budget method might be the answer you’re looking for.

(Yes, I know, we’re using the dreaded word BUDGET here… and but if you’ve tried a budget before and failed with it, HONESTLY – believe me, the half payment method is different!)

The key to getting out of debt and living within or below your means is finding a budget that works for you.

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What is the half payment budget method

The half payment budget or biweekly pay budget is really a simple concept that takes a little extra planning to get started. But once you get this method working, you will finally breathe a sigh of relief when you’re properly managing your money and you may even find a way to build your emergency fund and even have extra for your savings account.

(Doesn’t that sound great?!)

Basically, the half payment plan is where you take your regular, recurring bills and divide them in half and save these halves from your two paychecks to pay your bills ON TIME.

Yes! Each payday, you set aside the “half payment” and make the full payment when the bill is due.

Just hold on to your “half payment” until you have combined it with another “half payment” from your second payday.

I like to pair the half payment method with the cash envelope budget system. Putting these two methods together has made it easy for me to take control of my expenses and prevent overspending. If you would like to learn more about the cash envelope budget system, you can read that article HERE.

I want to be perfectly clear here. I’m not suggesting that you make two payments per month – I’m simply saying to divide your bills in half each pay period and hang on to the money until you have the full payment ready. Don’t worry, I’ll give you a few examples below.

How the half payment budget method works – with examples

Let’s look at an example, and compare how the half payment budget method might work better for someone paid biweekly than a regular “monthly” budget would.

Let’s say your monthly income is $2750.

Your monthly recurring bills (so this does not include food, entertainment, or savings):

  • rent/mortgage:  $900 due on the 1st of the month
  • car payment:  $350 due on the 5th of the month
  • auto insurance:  $100 due on the 15th of the month
  • loan payment:  $130 due on the 25th of the month
  • childcare:  $300 due on the 1st of the month
  • cable/internet:  $90 due on the 20th of the month
  • phone: $110 due on the 11th of the month

**Please note that your utility payment is not included. This is not a fixed expense and fluctuates each month. Take this payment out of your remaining money. 

Total recurring monthly payments:  $1,980

Money remaining monthly:  $770

So, what happens when we look at our expenses vs our income WITHOUT using the half payment method?

Example Budget #1 (not using the half payment method)

$1,375 – Paycheck #1 paid on the 1st

  • rent:  $900
  • car:  $350
  • childcare:  $300
  • phone:  $110
  • money remaining: -$285

$1,375 – Paycheck #2 paid on the 15th

  • insurance:  $100
  • loan payment:  $130
  • cable/internet:  $90
  • money remaining: $1,055

Well, that doesn’t seem to work out.

At the beginning of the month, you can’t cover all of your expenses and you can’t even think about putting food on the table. OUCH!

And at the end of the month, you’re lulled into a false sense of having lots of EXTRA SPENDING MONEY when that isn’t reality. 

Half the time you’re scrimping to get by, and half the time you’re spending wildly… and then the cycle starts again. (That’s basically the definition of living paycheck to paycheck.)

The half payment budget method balances all of this out. 

Example Budget #2 (using the half payment method)

$1,375 – Paycheck #1 paid on the 1st        

  • rent/mortgage:  $450
  • car payment:  $175
  • auto insurance:  $50
  • loan payment:  $65
  • childcare:  $150
  • cable/internet:  $45
  • phone: $55
  • money remaining: $385

$1,250 – Paycheck #2 paid on the 15th   

  • rent/mortgage:  $450
  • car payment:  $175
  • auto insurance:  $50
  • loan payment:  $65
  • childcare:  $150
  • cable/internet:  $45
  • phone: $55
  • money remaining: $385

Combine your half payments and pay your bills on time.

Now isn’t this better?!

You still have the same $770 remaining for the month (to be used for groceries, saving, entertainment + utilities) but using this method, you have an equal amount of leftover monies from each paycheck. 

THIS WAY, using the half payment budget method, you are able to determine that – biweekly – you should have $385 left for groceries, saving, utilities and entertainment.

This makes it MUCH easier to stop over-spending and also to make sure that you HAVE all the money you need set aside when your bills come due!

**If you are paid weekly, you can adjust and use this system with a quarterly method by dividing your bills by 4 and working the method that way.**

Pros and Cons of the Half Payment Budget Method

The Pros:

  • A consistent way to track your budget.
  • You’re less tempted to overspend when you know exactly how much you have and need.
  • You don’t have to use credit cards, or worse, payday loans to cover your bills.
  • Relieves stress by balancing your expenses.
  • Helps you see where all of your money goes by having this method on paper.

The Cons: 

  • You have to keep track of your half payments.
  • You have to train yourself to not touch your half payments.
  • You need to get a half a month ahead to begin.

RELATED POST:  How To Properly Budget Your Monthly Salary

How to use the half payment budget method

I don’t suggest jumping into this budgeting method all at once.

You’ll need to ease into the system to see if it works for you. Starting out might have you tightening your belt a little more, in the beginning, to get the flow going. But this will ease up after you have it all working properly.

You should start with the pay period where you have the least amount of bills due and start with only one expense. I suggest starting with your car payment and work with that payment for a month or so to get the hang of things.

Once you see how the half payment budget method works, you can begin transitioning all of your bills to this system.

How you choose to “set aside” your money is really up to you and will definitely take a degree of self-discipline. Many banks allow you to open separate accounts or holding accounts that may be used.

I prefer a simple envelope method. I use these envelopes and have them marked for each bill I’m working with and “hold” cash there until I’m ready to make my payment. These cash envelopes are nicely colored so you won’t mistake them for anything (trash…yes, I’m famous for throwing important items away) and are also tear and waterproof – so you can use them over and over and over again.

RELATED POST:  Stop Overspending with the Cash Envelope Budget System

Why the half payment budget method works

Many of us have that one pay period that is heavier on the expense side than the other(s). We all seem to live the 1st example above.

That HEAVIER bill paycheck is very tight with little to no wiggle room or even impossible…so no errors or emergencies.

This can even result in the need for paying bills with credit cards or relying on payday loans to help out. The latter also ends up being a vicious cycle that is almost impossible to get out of. 

When you change over to the half payment budget method, you’re still paying your bills once a month, but you’re just pulling the funds from your account a little differently.

You still have the same income. You still have the same total of disposable income. You have just adjusted your budgeting to make this total equally dispersed.

The half payment method helps you to visualize your budget in relationship to your income – and take control of your spending. It requires you to become more disciplined with your spending…but this is a good adulting thing to do. 

I’m a firm believer in having your budget on paper and at your fingertips so you always know exactly where your money is going and your remaining balance. Having amounts in your head or guessing isn’t a fail-proof system in taking control of your finances. 

Often we feel if we could just make a little more each month our financial woes would lessen. While it IS great to make more money, that truly won’t help if you don’t know how to manage the money you have.

More money without a proper budget will keep you in the same place. And we don’t want that!

Making the necessary changes is an important step in gaining peace of mind when it comes to your finances and achieving your goals. 

Do you use the half payment budget method to tackle your recurring bills? I would love to hear any tips I haven’t covered.

If you are at a loss as to where your money is going, be sure to read my post How to Track Your Spending and Stick to Your Budget. Here you’ll find useful tips on how to see exactly where your money is being absorbed.

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