Budget question re: biweekly vs monthly

[Wendy99]

I really hope someone can answer or offer advise asap ... I'm working on a budget - needed to redo everything and start from scratch. My question is dh and I both get paid biweekly (same week) and have 1 child tax cheque each month. We pay our mortgage biweekly. So my question is, I have always found it easier to budget biweekly; so I created a mini budget for each pay and for the child tax check - so I now have 3 mini budgets for each month - sounds confusing, but it's really much easier as I know exactly whats getting paid and from where. So anyways with my mortgage and pay being biweekly I would have 2 extra pays and 2 extra payperiods each year right? Do I ignore that on the budget since after my 2 pays and 2 payments it would be a bonus or how does that work. I really need to budget biweekly so changing it to monthly won't work. Also doing the pay x 26 / 12 won't work as it is currently set for biweekly budget. Just curious about those 2 extra pays and 2 extra mortgage payments .. if I ignore those on the budget will I just have some bonus money 2x a year? thanks.

[Greebo]

I really hope someone can answer or offer advise asap ... I'm working on a budget - needed to redo everything and start from scratch. My question is dh and I both get paid biweekly (same week) and have 1 child tax cheque each month. We pay our mortgage biweekly. So my question is, I have always found it easier to budget biweekly; so I created a mini budget for each pay and for the child tax check - so I now have 3 mini budgets for each month - sounds confusing, but it's really much easier as I know exactly whats getting paid and from where. So anyways with my mortgage and pay being biweekly I would have 2 extra pays and 2 extra payperiods each year right? Do I ignore that on the budget since after my 2 pays and 2 payments it would be a bonus or how does that work. I really need to budget biweekly so changing it to monthly won't work. Also doing the pay x 26 / 12 won't work as it is currently set for biweekly budget. Just curious about those 2 extra pays and 2 extra mortgage payments .. if I ignore those on the budget will I just have some bonus money 2x a year? thanks.

Rules of thumb:
- Do it ahead of time
- Do a zero dollar budget - where every dollar is allocated
- Don't make it too complicated or it wont work

What we do - instead of budgeting for the month OR biweekly, we budget 13 times a year, for 4 week periods. Our first budget in 2010 was from 1/1 - 1/28. Budget 2 is from 1/29-2/18. I get paid bi weekly so that is 2 paychecks per 4 week month, and so the budget starts with my check #1, and halfway through my check #2 comes in.

We forecast ahead another month just to see what's coming up - but basically before the month begins we estimate how much we'll get in total every 2 weeks, then we allocate it on paper. When it actually comes in or we actually spend money, we update the "actual" columns. (Note - we put $ in the grocery envelope on pay day, so that's ACTUALLY spent - we don't update the budget every time C pulls out the envelope at wal-mart)

If you prefer to do every two weeks - that's fine. But don't think of the money as "extra", no matter what you do. If you're budgeting bi-weekly then THAT is your budget cycle, and every 2 weeks you have to look ahead at what expenses are coming due and plan for them. Some cycles you won't have insurance payments, some you won't have car payments, some you'll have a bigger snowball than others - but it's never *EXTRA*. If you're doing a 2 week budget, then allocate EVERYTHING on a 2 week system.

[MomToTwoBoys]

I had this huge post written out, but realized it sounded really complicated.

I wanted to make it simple, so I decided to write it all over again.

We're also a bi-weekly check family with a tax credit. The only thing different is that we also get one payment every month on the 1st (which is my pension). Here's how we finally got our bill payments and budget down to something simple:

1) Use the two paychecks in your budget. If you have a month with a third check, put that amount aside.

2) Take each bill and divide it into two halves. Pay each half on each payday.

3) For bills that come out at once (for example, if your property tax comes out on the 1st), figure that into the paycheck that comes just before the withdrawal is to happen. If you get paid on the 27th and the a/w is on the 1st, put that amount aside in the budget. You can also put half of that amount aside in the check beforehand. For example, if your property tax comes out on the 1st and it's a large chunk, you can divide it in half and put the money aside. That cash that's put aside acts as a buffer to keep your cashflow from dipping down into overdraft.

Dividing the bills in half that you pay manually, you can designate those halves to be paid in two paychecks. For a third paycheck, figure out if you have any bills that need to come out of that (for us, it's the mortgage, gas, groceries, smokes, etc.) and tuck that cash away into savings (or pay on some debt with it).

[itlw8]

I you have set up with your bank to pay biweekly there is no extra week in the year. the mortage money will still come out of it. that is why you pay extra during the year automatically.

[qsaver704]

I have no answers because I have had the same question. I think I will try Greebo's way. I did want to say I like the idea of a monthly tax credit as far as I understand it. It is better than waiting for the US Govt. to give it to you once a year.

[Wendy99]

Thank you for the help! We'll just continue budging biweekly. We pay our line of credit and insurance with one check and all our other bills (heat, hydro, phone, internet, cable etc) with our other check. The mortgage, gas, groceries etc coming out of both. We pay our bills before we receive the bill (they are often the same or very close to each month) - we do that on pay day. That way when the bill comes in I can just toss it to the side knowing its paid and there are no worries. Seeing that 0 owing is a blessing Now we have to work on tightening the strings a bit more.