My husband gets paid once per month, at the end of the month. The first month of his job (last June) was tough for us. We were living off wedding gift money, credit cards, and my smaller bi-weekly check. Until we got his first paycheck, we didn’t really have much money.
Since then, we’ve adjusted to the monthly paychecks–and I’m thinking it might help us stay on target with our spending and saving in the long run.
(BTW, With my freelance work, I get a (much smaller than his) check each week.)
How can your paycheck frequency affect your spending and saving habits?
For us, it has been a little tricky to get our emergency fund established and growing. Our rent is due on the first of the month (though rent received by the fifth of the month is not considered late).
For us to use auto-pay, we have to have that rent money ($750) in our bank account several days before the due date, so the bank will draft a check and send it in on time. That means, the money needs to be there by oh, the 25th of the month or so for it to auto withdraw.
In one way, one of his paychecks has to cover TWO months rent. He got paid on Jan. 30. Money from that will be used to pay our February rent, and it will also need to be in the account so we can use auto-pay to send in our March rent check. Kind of a pain.
That means, we need an extra $750 cushion in our checking account to cover the rent payment.
With the rest of the money, we pay our bills at the beginning of the month (phone, car insurance, etc.). Most things auto withdraw, such as our electric bill and car payment near the middle to end of the month.
Once the money is allocated, that’s it. Gotta wait another month for a big paycheck.
With my smaller paychecks, they trickle in each week. The money is used to fill our emergency fund, primarily. It’s also nice to have a little bit coming in during the month.
Even if my husband were paid bi-weekly, it would be the same amount of money each month total (duh). So, in that sense, we would still need that $750 rent cushion.
But, I think that since he gets paid less often, we have to be more vigilant with the money. If we overspend, our rent check could be late.
Do you get paid weekly? Bi-weekly? Monthly? How do you think that affects your spending and saving? Does it even matter?