Biweekly or semi-monthly: what’s the difference?

KJ: What’s the difference between biweekly and semi-monthly and how it impacts your budget? Most people think they are the same. Aren’t there about four weeks each month, so shouldn’t they be the same? Why should you care about the difference? There is a simple solution to saving a lot of extra moulah if you get paid biweekly (sorry, semi-monthly payees)…and your budget will be proud!

Let’s break down the biweekly vs semi-monthly paychecks
A biweekly paycheck means you get paid every two weeks. Semi-monthly means you get paid twice per month. With a biweekly payment, you get paid 26 times per year (52 weeks divided by 2), and with semi-monthly, you get paid 24 times per year (12 months times two). That means that the biweekly paycheck has two months of the year with an extra paycheck!

Save, save, save
A good strategy to sock away some extra savings (or add to your vacation fund, home down-payment, gifting, real estate taxes – if you don’t escrow) is to take those two months of the year with the extra biweekly paycheck, and save it! Try building your monthly budget based on just two paychecks, and then you will quickly discover that all of the sudden in two different months of the year (spaced conveniently about six months apart) you will have some ‘extra income’ from those extra biweekly payments. Who doesn’t like some extra income anyways? Even if you save nothing else during the year, this method alone can help you sock away 8% of your net income! That already puts you above the national average savings rate (scary huh?) and gets you that much closer to achieving your goals.

Money Stack

In our household, we have one semi-monthly payment and one biweekly payment. While it varies the timing of our income and expenses (as sometimes the biweekly payments occur early in some months and then later in other months), we focus on our total ‘cash flow’ for the month (income and expenses) excluding those extra biweekly paychecks to make sure we are on track. Hurry up March, here comes the next ‘extra’!

    Do you get paid biweekly or semi-monthly?
    Have you experienced both methods before?
    Which do you prefer – semi-monthly vs biweekly?

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4 thoughts on “Biweekly or semi-monthly: what’s the difference?

  1. Bob is who taught me this otherwise unknown-to me reality. Having had a father who recieved one pay check a month, then being a teacher with my one a month, I didn’t know a difference. Your saving concept is great!

  2. We too have one semi-monthly and one biweekly. I’ve never really broken down the numbers or months to see where extra would be coming from. I find this post very interesting. It is a great breakdown of where potential extra dough could be! Great stuff!

  3. Many mortgage companies allow restructuring the default monthly payments to either bi-weekly or semi-monthly based on how often you are paid. This will provide savings on the total interest paid over the life of the loan by reducing the daily average of the balance of the loan due to the more frequent payments.

    • Great point. Especially if you get paid biweekly, this can be a great way to better align your income with your expenses, so you can save on interest on your mortgage.

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