Paycheck budgeting

What It Means

Paycheck budgetingBudgetA plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it. See more plans your money one paycheck at a time instead of one month at a time. Each bill is assigned to the paycheck that arrives before its due date, and whatever that paycheck has left after its bills is the spending money until the next payday. It suits people paid every two weeks or twice a month, when bills and paydays rarely line up neatly.

How It Sounds at Home

• "Rent comes out of the first check, the car out of the second."
• "The first paycheck of the month is always the tight one."
• "I plan every paycheck the day it lands."

The Breakdown

Worked example. Sam is paid $1,900 on the 1st and the 15th (made-up numbers):

After its bills, the first paycheck keeps $370 and the second keeps $1,280.

What the result means. Sam has $370 for groceries, gas and everything else for the first two weeks, then $1,280 for the next two. The swing comes from rent falling due just after the first payday. If the phone and the card minimum were due after the 15th, the first paycheck would keep $500 and the second $1,150, which is why the CFPB suggests asking companies to move due dates.

How to set it up

1. List every bill with its amount and due date.
2. Mark your paydays on the same calendar.
3. Give each bill to the paycheck that arrives before it's due.
4. Subtract, and plan the rest of each paycheck for spending and savings.
5. If one paycheck can't carry its bills, ask to move a due date.

Good to Know

The Consumer Financial Protection Bureau's free bill calendarBill calendarA calendar that shows each bill on the day it's due, often next to your paydays, so you can see which paycheck has to cover which bill. See more is built for this. It has you write down each bill, its amount and due date, and when your income arrives, then mark the day you'll pay: 7 days before the due date if you pay by mail and 2 days before if you pay online. The CFPB suggests comparing each week's bills with that week's income, and when bills come out ahead, asking some companies to change your due dates; its "Request a change in your bill due date" worksheet helps with that call or letter. Keep the calendar somewhere you'll see it every week.

Related Terms and Categories

• Bill calendar

  A calendar that shows each bill on the day it's due, often next to your paydays, so you can see which paycheck has to cover which bill.

• Pay frequency

  How often an employer pays you, usually weekly, every two weeks, twice a month or monthly, which sets how many paychecks you get in a year.

• Semi-monthly pay

  Being paid twice a month on set dates, 24 paychecks a year, as opposed to biweekly pay every two weeks, which comes to 26.

• Paycheck to paycheck

  Spending all of one paycheck before the next arrives, so there's little or nothing left over in between.

• Take-home pay

  The money that actually reaches you from a paycheck after taxes and other deductions are taken out, also called net pay or net income.

Household money and budgeting