One of the most confusing things to figure out when starting a budget with multiple paychecks each month is determining which bills to pay with each source of income . It’s much more straightforward for those who get one paycheck per month. A budget can be set up based on that one paycheck for the rest of the month. Bills can simply be paid when due with the money from the paycheck. Personally, I’ve had experience with both situations and prefer one paycheck, but budgeting with multiple paychecks can work just fine too.
For those with multiple paychecks, you have to decide which bills get paid with the 1st paycheck, 2nd paycheck, etc. This is a common situation for family’s with multiple incomes or for someone who gets more than one paycheck from their job. It’s especially challenging to get started if the finances are disorganized, or if you’ve gotten behind on paying bills which requires paying double (and sometimes more) to get caught up. But, don’t worry. You can get things in proper shape with just a few simple steps.
Steps to allocate your income
The best way to allocate your income is to use a spreadsheet or pencil and paper. Take a look at this income allocation spreadsheet example from Crown Financial Ministries.
- List out your bills in the first column. Examples may include the monthly mortgage, electricity, car payment, etc.
- You won’t see this in the example, but create another column to identify the due date for each bill. You may have to look at statements you’ve received in the mail, or go online to determine the due dates if you don’t know them off-hand. This information is very important, so definitely pick up the phone and call customer service if necessary.
- In the remaining columns identify which paycheck you‘re going to use to cover each bill . As an example, you could pay your car payment using the second paycheck each month and your mortgage with the first.
Don’t Forget Other Expenses
Determining which paycheck to allocate for bills isn’t as easy as guessing. You have to keep in mind all expenses (not just regular reoccurring bills). So, make sure you include all your major expenses in the list as well and assign them a paycheck.
Food is a good example. Let’s say your food budget is $400 per month. You could spend $200 a paycheck on food, or you could set aside $400 out of your first paycheck to fund your food needs for the entire month. In either case, you need to make sure you have enough money to pay regular reoccurring bills too. You don’t want to be short on money and waiting frantically until the next paycheck arrives.
Once you have a good understanding of all your expenses, your bill amounts and their due dates, you can determine which income source to use and feel confident you’ll have enough money in your checking account.
