What is the half payment method? The half payment method is a budgeting technique where you take your regular monthly bills and divide them in half. This means each time you get paid, you’ll set aside half of the bill’s payment so you’ll be prepared when the full payment is due.
If you’re struggling to make ends meet each paycheck, then you may want to consider using the half payment method.
Use this budgeting hack if you’re paid biweekly. It can be a helpful way to get ahead on bills, manage your money, and provide financial peace.
For many people, the first half of the month is usually bill heavy. After paying all your bills at the beginning of the month, it seems like there’s nothing left to cover daily living costs.
As a result, you feel broke and might have to rely on using credit cards as a bridge until you get your next paycheck. This can be a huge source of financial stress.
The second half of the month usually has less bills, but unexpected expenses always seem to crop up.
This means instead of paying off your credit cards that you used to cover groceries in the first half of the month, you might spend this money on other things.
If you want to break the cycle of living paycheck to paycheck and save money, there’s a simple budget strategy you can follow to pay the same amount for your fixed bills with each paycheck.
It’s called the half payment method. Here you’ll find tips to help you get started in using the half payment method to improve your finances!
Related Posts:
- What is a budget calendar and how to use it
- How to budget when you live paycheck to paycheck
- How to budget when you get paid biweekly
Table of Contents
How do you split bills between paychecks?
One paycheck will cover half of your expenses and the next paycheck will cover the other half. This is a simple way to split your bills.
The half payment method is great for those who get paid weekly, biweekly or twice a month. This method can be a helpful way to spread out your expenses and manage your money with minimal stress.
No matter what your income level is, the half payment method can help you live within your means, save more money, and pay off debt.
For example, if most of your expensive bills are due at the beginning of the month, such as rent or mortgage, it can be easy to spend most of your paycheck to cover these bills.
This can leave less money to cover living essentials such as groceries, which you may have to put on your credit card. You can avoid this by planning ahead and setting aside the half payment in advance.
How to pay your bills twice a month
If you get paid biweekly, you’ll set aside half the cost of your bills during the pay period prior to when these bills are due.
Then when it’s time to pay your bills, you’ll have the money ready and won’t have to struggle to come up with the entire amount from one paycheck.
You will only need half because you’ve already set aside the other half from your previous paycheck. This is a simple and effective way to pay bills twice a month.
For example, if your rent is $1,000 per month, this means:
- You’ll set aside $500 from one paycheck, during the pay period prior to when your rent is due.
- Then next time you get paid, you’ll set aside $500 to cover your full rent payment.
This is how you’ll handle the half mortgage payment twice a month. For more tips, check out the in-depth guide below on how to budget when you get paid twice a month.
Read Next: How to budget when you get paid twice a month
Where do I set aside half the bill payment?
When following the half payment method, you may be wondering where to set aside the money to cover half your bills.
Perhaps you’re worried that you’ll be tempted to spend this money on other things instead of saving it to pay your bills. As a spender at heart, I can appreciate this concern.
The best place to save the advance half payments is in a separate checking or savings account that is strictly for bills.
This way, you won’t be tempted to spend the money on other things. Or you can take cash out and put it in an envelope. This is particularly helpful for those following the cash envelope system.
Some companies or landlords accept partial payments. You can ask if it’s possible to pay half your bill directly to the company during the prior pay period. Then pay the remaining half when the bill is due.
How the half payment method works
If you are a visual person like me, I learn best when seeing a breakdown of how a budgeting method works. Here’s an example of how to use the half payment method:
When following this half payment budget template, let’s say your monthly take-home pay is $3,000 per month.
You get paid twice per month, on the 1st and on the 15th. Your monthly fixed expenses (regular bills) look like this:
- Rent: $950 (due on the 1st)
- Cell Phone: $50 (due on the 15th)
- Internet: $50 (due on the 1st)
- Water Bill: $50 (due on the 5th)
- Car Payment: $300 (due on the 5th)
- Netflix: $15 (due on the 25th)
- Insurance: $100 (due on the 10th)
Traditional Monthly Budget Method
Below is what a traditional monthly budget would look like:
Paycheck #1: $1,500
- Rent: $950 (due on the 1st)
- Internet: $50 (due on the 1st)
- Water Bill: $50 (due on the 5th)
- Car Payment: $300 (due on the 5th)
- Insurance: $100 due on the 10th)
Total payment due: $1,450
Amount leftover: $50
As you can see, having just $50 leftover from this paycheck is not enough to cover other living essentials such as groceries, transportation, or emergency expenses.
This can lead people to get into debt by having to rely on credit cards each month to cover their variable expenses.
Paycheck #2: $1,500
- Cell Phone: $50 (due on the 15th)
- Netflix: $15 (due on the 25th)
Total payment due: $65
Amount leftover: $1,435
Having more money leftover in the second half of the month is great, but it can lead to careless spending if there’s no budget plan in place.
Instead of using the money to pay off credit cards, people might be tempted to spend this money on other things.
Read Next: What is the 70-20-10 buget rule?
Half Payment Budget Method
Below is what a half payment budget would look like:
Paycheck #1: $1,500
- Rent: $475
- Internet: $25
- Water Bill: $25
- Car Payment: $150
- Insurance: $50
- Cell Phone: $25
- Netflix: $7.50
Total payment amount: $757.50
Amount leftover: $742.50
Below is an example of how this would look when using my Paycheck Budget worksheet.
Paycheck #2: $1,500
- Rent: $475
- Internet: $25
- Water Bill: $25
- Car Payment: $150
- Insurance: $50
- Cell Phone: $25
- Netflix: $7.50
Total payment amount: $757.50
Amount leftover: $742.50
Below is an example of how this would look using my Paycheck Budget worksheet.
As you can see, you’ll have $742.50 leftover to at the end of each pay period.
The half payment method takes some practice and careful planning to set up in the beginning, but it can be a better way to spread out your expenses and manage your money.
Your leftover money at the end of each pay period is evenly distributed to cover your variable expenses such as groceries, transportation, dining out, entertainment, and so on.
You may even have enough money leftover to put towards your savings, building an emergency fund or paying off debt.
Do you get paid weekly?
If you get paid weekly, you can still use the half payment method to help you budget and save money.
To do so, adjust this method to make it the quarter payment method. This means you’ll set aside one-fourth of your fixed expenses each paycheck.
Pros of the half payment method:
- It’s a simple way to manage your finances each month, compared to traditional budgeting methods.
- You won’t feel like you’re living paycheck to paycheck anymore or struggle to stretch your money until next payday.
- You’ll know exactly where your money is going.
- You’ll prevent impulse spending by moving your half payments to a separate checking or savings account that’s used only for bills.
- You won’t have to rely on credit cards to help you make ends meet until next payday.
- You’ll gain more confidence and feel more in control with your budget.
Cons of the half payment method:
Like with any budgeting method, there can be some disadvantages as well. Here are some reasons why you may not find the half payment method helpful:
- It takes time to set up. To get the full benefits from using this budgeting method, you should be at least half a month ahead.
- It can be tempting to spend the money you set aside for your bills. This is why I like to put the money in a separate checking or savings account so I won’t spend it on other things.
- You have to pay close attention to due dates. This is why you might find using a Budget Calendar particularly helpful.
Will the half payment method work for you?
As I mentioned above, the half payment method can work well for those who get paid weekly, biweekly or twice a month.
No matter which budgeting method you choose, it’s important to remember that it takes time to set up and make adjustments to make it realistic for you.
Planning ahead for your bills can be less stressful than scrambling to make sure your fixed expenses are paid.
The half payment method can be a highly effective solution to help you pay your bills in full and on time.
This can give you the financial peace you’ve been looking for when it comes to managing your finances.
Read Next: 50 creative ways to save money on a tight budget
How to start using the half payment method
Before you start following the half payment method, you can decide if you want to use this method for ALL your fixed expenses or just focus on ONE bill payment in the beginning, such as your rent or mortgage.
If you prefer to choose a smaller bill to make it easier, then that’s fine too.
Once you’ve gotten a handle on using the half payment method to help budget for this bill, then you can slowly add more bills in the subsequent pay periods.
It can take a few months of following the half payment method before you feel like you’ve gained control of your finances.
Below are five simple steps to help you start using the half payment method:
Step 1: Write down all your regular bills
The first thing you need to do is write down all your regular bills and find their due dates. These are your fixed expenses that are usually around the same amount each month.
I like to use a Recurring Bill worksheet to help me keep track of all my bills and their due dates.
This is a master list of all your regular, annual, and quarterly bills. If you’re interested, you can grab the one I use here in my Budget Planner.
Step 2: List your bills on a Budget Calendar
For visual learners like myself, I like to use a Budget Calendar to help me see when all my bills are due that month.
You can also use a Budget Calendar to write down your paydays, when you make savings contributions, and any special events or occasions happening that month (birthdays, vacations, and so on).
You can use any type of calendar to do this or grab the one I use here in my Budget Planner.
Step 3: Take each bill and divide it in half
Once you have all your regular bills written down and their due dates, it’s time to divide your bills in half.
For example, if your rent is $950 per month, you would need to set aside $475 from each paycheck (assuming you get paid biweekly).
This means during the pay period prior to when your rent is due, you’ll set aside $475 from your first paycheck.
Then when your second paycheck hits your account, you’ll only need to half ($475), which you’ll add to the money you’ve previously set aside from your first paycheck.
Suddenly, $950 seems less overwhelming when you only need to save $475 per paycheck.
The best way to keep track of your bill payments in your budget is to follow the budget-by-paycheck method.
This means each time you get paid, you’ll create a spending plan for that paycheck.
You may find this easier than following the traditional one-month budget. If you’re interested, you can grab this worksheet in my Budget Planner.
Step 4: Each payday, transfer the money you need to set aside
Each time you get paid, you can transfer the amount of money you need for your half payment to a separate checking or savings account.
This can help keep the money safe and prevent overspending since this account will only be used to pay bills.
Make sure to choose a bank that allows you to open multiple checking or savings accounts for free and have a low minimum balance requirement.
You can also withdraw cash and put it inside an envelope to store until your bill is due. Choose the method that works best for you.
If you are 100% confident that you won’t spend the money on other things, then you can leave the half payment amount in your main checking account.
But if you really want this budgeting strategy to work, it’s better to transfer the money to where you’ll be least tempted to spend it carelessly.
Step 5: When a bill is due, transfer the money back to your main checking account
Before the bill is due, transfer the money back into your main checking account and pay the bill in full.
Yes, it may seem a bit tedious to follow these steps in the beginning. Once you get the hang of it, it’ll become easy to stay on top of your finances.
Read Next: How to budget with an irregular income
How to be successful with the half payment method
If you want to be successful with the half payment method, it will involve some careful planning as outlined in the steps above.
Ultimately, the half payment method can help you manage your monthly cashflow and break the cycle of living paycheck to paycheck.
When you get a bonus or receive any extra income, put it towards your half payments in advance.
If you get paid biweekly and receive a third paycheck in one month, set aside that third check for half payments. This can help prevent spending that extra money on other things.
If you’re spending more money than you earn each month, unfortunately the half payment method won’t be much help.
In this case, the first step is to figure out how to cut back on your monthly spending so you can live within your means.
Half Payment Method FAQs
How do I split my weekly paycheck?
A simple way to split your weekly paycheck is to follow the 50/30/20 budget rule. This rule of thumb recommends dividing your paycheck into 3 sections: 50% of your take-home income towards your needs, 30% towards your wants, and the remaining 20% towards your savings and debts.
How do I change my bill due date?
Changing due dates on your monthly bills can make it easier manage and pay your bills on time. First, you need to decide which pay dates you would like to modify. Then you can contact your creditors to ask for a change. This is usually done with a phone call or online.
How to budget bills biweekly?
To budget your bills biweekly, you’ll need to create a biweekly budget. To do this, write down all your paydays and expenses on a Budget Calendar. Then determine your variables spending and savings goals. Create a new budget for each paycheck (or pay period).
FAQs
How to Start Using the Half Payment Method to Budget? ›
What is The Half Payment Budgeting Method? Simply put, it is a method where you take the total amount of all your regular monthly bills and split it in half. Each paycheque you put half of the total bill amount to the side so that at the end of the month you can pay it in full.
How do you use half payment method? ›What is The Half Payment Budgeting Method? Simply put, it is a method where you take the total amount of all your regular monthly bills and split it in half. Each paycheque you put half of the total bill amount to the side so that at the end of the month you can pay it in full.
How to make a budget you can stick to with the easy 50 30 20 rule? ›- Spend 50% of your money on needs.
- Spend 30% of your money on wants.
- Stash 20% of your money for savings.
- Calculate your after-tax income.
- Categorize your spending for the past month.
- Evaluate and adjust your spending to match the 50/30/20 rule.
Example 50-20-30 budget for one person
She can spend 50% of her budget ($797.50) on essential items, 20% of her budget ($319) on paying off her student loans and 30% of her budget ($478.50) on entertainment.
The easiest way to split your payment responsibilities is to draw a line down the middle; each is responsible for half of the bill payments. It's helpful to create a joint account to pay your bills, and you can contribute an equal amount of money every month to cover the costs.
How do you split a paycheck budget? ›Budgeting by paycheck
Poorman suggests the popular 50/30/20 rule of thumb for paycheck allocation: 50% of gross pay for essentials: groceries, bills, rent or mortgage, debt payments, and insurance. 30% for spending on dining or ordering out and entertainment. 20% for personal saving and investment goals.
A split payment involves using multiple payment sources to settle the whole cost of a single transaction. Split payments allow individuals to use multiple payment methods to complete an order, or enable several individuals to jointly contribute part of the order total.
How do you budget for beginners? ›- Make a list of your values. Write down what matters to you and then put your values in order.
- Set your goals.
- Determine your income. ...
- Determine your expenses. ...
- Create your budget. ...
- Pay yourself first! ...
- Be careful with credit cards. ...
- Check back periodically.
- 50% for mandatory expenses = $2,000 (0.50 X 4,000 = $2,000)
- 30% for wants and discretionary spending = $1,200 (0.30 X 4,000 = $1,200)
- 20% for savings and debt repayment = $800 (0.20 X 4,000 = $800)
How about this instead—the 50/15/5 rule? It's Fidelity's simple rule of thumb for saving and spending: Aim to allocate no more than 50% of take-home pay to essential expenses, save 15% of pretax income for retirement savings, and keep 5% of take-home pay for short-term savings.
How much savings should I have at 50? ›
By age 50, you would be considered on track if you have three to six times your preretirement gross income saved. And by age 60, you should have 5.5 to 11 times your salary saved in order to be considered on track for retirement.
What is the 75 15 10 rule? ›for anybody with any amount of money. so for every dollar you make, you can spend 75 cents. then 15 cents is the minimum that you can invest, and 10 cents is the minimum that you save.
What does the 50 30 20 rule in budgeting allocate 50% of your income to? ›The 50-30-20 rule is a simple guideline (not a hard-and-fast rule) for building a budget. The plan allocates 50% of your income to necessities, 30% toward entertainment and “fun,” and 20% toward savings and debt reduction.
At what point do you start splitting the bill? ›“According to our survey, couples, on average, are discussing finances around five months into the relationship, which comes before they even say 'I love you,' which takes an average of nine months,” Stafford said. “While each relationship is different, I think the earlier you begin talking about money, the better.
How do I pay my bills every two weeks? ›Option 2: Match Bi-Weekly Paychecks to Bi-Monthly Bills
This means using each paycheck to pay bills coming due during the next half-month period. For example, if you get paid on the 3rd and 17th of the month, you would use the paycheck on the 3rd to pay for bills from the 16th through the end of the month.
40% of your time should be devoted to your most important priority. 30% of your time should be devoted to your second priority. 20% of your time should be devoted to your third priority. 10% of your time should be devoted to everything else (urgent and obligatory tasks).
What is the best budgeting split? ›One of the most common percentage-based budgets is the 50/30/20 rule. The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings.
Can you live off $1,000 a month after bills? ›Getting by on $1,000 a month may not be easy, especially when inflation seems to make everything more expensive. But it is possible to live well even on a small amount of money. Growing your income.
What is the best budget rule? ›The 50/30/20 rule is a budgeting technique that involves dividing your money into three primary categories based on your after-tax income (i.e., your take-home pay): 50% to needs, 30% to wants and 20% to savings and debt payments.
Is it better to split payments or pay in full? ›Carrying a balance does not help your credit score, so it's always best to pay your balance in full each month. The impact of not paying in full each month depends on how large of a balance you're carrying compared to your credit limit.
Is it smart to split payments? ›
It can be especially helpful to make multiple credit card payments if you're a big spender. Spreading your payments between paychecks can keep your bank account more level throughout the month as opposed to dropping a large lump sum on your credit card balance all at once.
How do you budget properly? ›- keep all your receipts and bills.
- limit your spending as much as possible to what is in your budget.
- update your budget with any changes, for example, a pay raise, a bill increase, etc.
- compare your budget to what you actually spend at the end of each month.
With the 50/50 rule, managers assess 50% of a project's value at the start and 50% when it's complete. So, for example, if a project team is working on a fence that goes around an entire property, they can use their progress on the first portion of the fence to expect their total time and spend.
How to budget on $3,500 a month? ›If you make $3,500 every month, attribute each dollar to an expense. You might put $1,750 toward living expenses, $700 toward paying off debt, and $1,050 toward personal expenses like going to the movies or saving for vacation. At the end of the month, your balance is zero, because every dollar is accounted for.
How much savings should I have at 35? ›Fidelity says that by age 30, you should aim to have the equivalent of your annual salary in a retirement plan. By age 40, you should have three times your salary. So by age 35, your goal should be to have 1.5 times your salary socked away.
What is the budget 50% rule? ›The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.
What is the 25x spending rule? ›Basically, the Rule of 25x says that at retirement, you should have 25 times your planned annual spending saved. That means if you plan to spend $50,000 in your first year in retirement, you should have $1,250,000 in retirement assets when you walk away from your job.
What is the 90 10 rule in spending? ›The 90/10 investing strategy for retirement savings involves allocating 90% of one's investment capital in low-cost S&P 500 index funds and the remaining 10% in short-term government bonds. The 90/10 investing rule is a suggested benchmark that investors can easily modify to reflect their tolerance to investment risk.
What is a good 401k balance at age 50? ›By age 50, you should have six times your salary in an account. By age 60, you should have eight times your salary working for you. By age 67, your total savings total goal is 10 times the amount of your current annual salary. So, for example, if you're earning $75,000 per year, you should have $750,000 saved.
How much money do you need to retire comfortably at age 65? ›Here's how much you would need to save in to comfortably retire: Current retirement savings balance: $10,000. Desired annual income (after taxes) during each year of retirement: $50,000. Annual Social Security benefit: $21,379.56 (given that the average social security benefit is $1,781.63)
How much money needed to retire at age 60? ›
How much should I have saved for retirement by age 60? We recommend that by the age of 60, you have about eight times your current salary saved for retirement. So, if you earn $75,000 a year, you would have between $525,000 to $600,000 in retirement savings by 60.
What is the 70 20 10 rule money? ›Applying around 70% of your take-home pay to needs, letting around 20% go to wants, and aiming to save only 10% are simply more realistic goals to shoot for right now.
What is Rule of 72 and 69 in time value of money? ›For continuous compounding interest, you'll get more accurate results by using 69.3 instead of 72. The Rule of 72 is an estimate, and 69.3 is harder for mental math than 72, which divides easily by 2, 3, 4, 6, 8, 9, and 12. If you have a calculator, however, use 69.3 for slightly more accurate results.
Does the Rule of 72 always work? ›The Rule of 72 is reasonably accurate for low rates of return. The chart below compares the numbers given by the Rule of 72 and the actual number of years it takes an investment to double. Notice that although it gives an estimate, the Rule of 72 is less precise as rates of return increase.
What is the disadvantage of 50 30 20 budget? ›- Lacks detail.
- May not help individuals isolate specific areas of overspending.
- Doesn't fit everyone's needs, particularly those with aggressive savings or debt-repayment goals.
- May not be a good fit for those with more complex financial situations.
20%: Savings
Finally, try to allocate 20% of your net income to savings and investments. You should have at least three months of emergency savings on hand in case you lose your job or an unforeseen event occurs. After that, focus on retirement and meeting other financial goals down the road.
The biggest chunk, 70%, goes towards living expenses while 20% goes towards repaying any debt, or to savings if all your debt is covered. The remaining 10% is your 'fun bucket', money set aside for the things you want after your essentials, debt and savings goals are taken care of.
Is it OK to split bill on date? ›The most significant advantage of splitting the bill on a date is that it is fair and equal. After all, two of you have been present on the date, and it's fair that you both pay your way. This creates equity in the relationship from the outset and ensures that one person isn't taken advantage of unfairly.
Should couples split bills in half? ›Separate expenses and responsibilities: No split is perfect, but assigning expenses based on income can lessen the load on both of you. The higher income earner can pay the rent or mortgage, while the other person can take groceries and the utilities. Don't forget the main objective here: you all are a team.
How do you politely say going Dutch? ›You might say, "I'd be happy to go to dinner with you, but I'd prefer if we go Dutch. I hope that won't be a problem." If they insist on paying, you can say, "I appreciate it, but I'm more comfortable paying my own way this time. We can discuss other arrangements in the future."
How far in advance should you pay bills? ›
The best time to pay a credit card bill is a few days before the due date, which is listed on the monthly statement. Paying at least the minimum amount required by the due date keeps the account in good standing and is the key to building a good or excellent credit score.
Does paying bills twice a month help credit score? ›While making multiple payments each month won't affect your credit score (it will only show up as one payment per month), you will be able to better manage your credit utilization ratio.
How do you survive on a biweekly paycheck? ›- Pay down (mainly) high-interest debt. ...
- Build an emergency fund. ...
- Save for a big goal. ...
- Get ahead on bills. ...
- Fund much-needed rewards.
Are split payments possible? Most online merchants won't allow you to split your payment. Internet stores may allow you to combine a gift card with a credit card when you make a purchase, but they rarely let customers use two credit cards, or a credit and debit card mix, to do the same.
Can you split payment with two cards? ›When it comes to online shopping, retailers typically won't allow split payments between two credit cards. If you're shopping in person or dining at a restaurant, you're more likely to find merchants who allow it.
Can I split payment with debit card? ›Yes, you will need to complete separate sessions for each payment. Each payment will be listed separately on your bank or card statement and have separate confirmation numbers. You will be charged separate convenience fees for each payment.
Can you split payment between two cards? ›Probably not. Most online merchants won't allow you to split your payment this way. Internet stores may allow you to combine a gift card with a credit card when you make a purchase, but they rarely let customers use two credit cards, or a credit and debit card mix, to do the same.
Does split payment affect credit score? ›A partial payment can affect your credit score because a lender may regard it as a missed or delayed payment if it's below the minimum payment amount. This could lead to marking your account delinquent or in default, which adversely impacts your credit score.
Can I split my minimum payment? ›If you struggle to make your full minimum payment when it's due, you can split this payment between the two paychecks preceding the due date. So, if your minimum payment is $50, you could pay $25 per paycheck to spread out the cost.
Can you use multiple Visa gift cards on one purchase? ›“Although you can use multiple Visa or other bank-issued gift cards in stores in a single transaction, you can typically only use one per transaction when shopping online.” The workaround there is to use a bank-issued card to purchase a store gift card, she adds.
Can PayPal do split payments? ›
The PayPal Bill Split feature helps you easily split costs between friends and family. You can split a bill within your PayPal account or on certain partner sites.
Can you split credit card balance? ›By making multiple credit card payments, it becomes easier to budget for larger payments. If you simply split your minimum payment in two and pay it twice a month, it won't have a big impact on your balance. But if you make the minimum payment twice a month, you will pay down your debt much more quickly.