It’s called Microsoft Excel and basic first grade math.
It is common to receive a paycheck twice a month (rather
than weekly), making it harder to budget appropriately when predicting your
expenses. I know a lot of people who pay their mortgage/rent with one paycheck,
leaving them with very little for anything else until that second paycheck
rolls around in two weeks. Trust me. I’ve
been there.
I’ve come up with a way to have an even bi-weekly budget, so
that I am paying approximately the same amount towards bills with each
paycheck, and so that at the end of both
payment cycles, I have the same amount of money for other necessities.
The first step in creating any budget is figuring out your expenditures. Be honest with yourself! If you spend $200 a month on Starbucks, put
it on the list!
Here are some other examples of what you may need to include
on your expense list.
Mortgage/rent=$1100/month
Internet/Cable=$150/month
Car Insurance=$75/month
Groceries=$500/month
Phone (landline) =$100/month
Phone (cell) =$100/month
Gas=$125/month
Home security=$30/month
Electric=$145/month
Water=$25/month
Waste management=$12/month
Pest control services=$33/month
Savings/investments=$100/month
529 savings for children=$100/month
The second step is a little tricky. Once you have the
costs, you’ll need to divide them as evenly as possible between your two pay
periods (sample sheet below). So, if your total monthly expense is $2600, you
will want to try to split up your bills so that you pay $1300 with one paycheck
and $1300 with the other. Please also pay attention to when your bills
are due.
The sample sheet I’ve come up with is based on a salary
of $3000/month net (no, this is not my income; I am just using this figure to
make things easier). In the below
spreadsheet, I decided to pay the 529 account, the landline phone, internet and
cable, car insurance and waste management bills with the first paycheck of the
month. I decided to pay the 529 account, the cell phone, the electric, the home
security, the pest control and the water bills with the second paycheck of the
month.
*You’ll notice that
even though I do not pay my mortgage twice per month, I listed a mortgage payment
for both pay cycles. Rather than paying
the large mortgage payment with one paycheck, I divided the mortgage amount and
added it to both pay periods. It’s sort
of like writing a check to yourself and cashing it when your mortgage is due. I
did this to distribute the expenses more evenly. Please feel free to divide
your expenses as you see fit. This is
just what works for us.
As you can see, I also have a “predicted” column and an
“actual” column. The “actual” column
isn’t necessary, but I like to see where my money goes. For instance, if I decide to buy something
for myself or go out to eat, I note it as an extra in the “actual” column. This way, every month, I know exactly where
every penny went. It’s also interesting
to see monthly spending trends.
I’ve found that deducting money from each paycheck every
month in smaller amounts doesn’t hit the pocket as hard when it’s time to pay
the bills. Is this the very definition
of paycheck to paycheck living?
Possibly, but it doesn’t ever stress me out in the way that “paycheck to
paycheck living” is normally described. When
it comes down to it, you should have the same amount of money to play with
regardless of how you decide to budget. I
hope you find the way that works best for your family.
Happy budgeting!
