When is payday?

by Rocket Finance

How often do you get paid and does it affect how you spend and budget?

I have been working a more or less full-time since 1997. The other day, I was thinking about all of the different paydays that I have had over the last decade:

  • Paper check every Friday afternoon – kind of an odd way to do business. The check had all of the requisite taxes taken out, but the check was handwritten. This was an hourly job with a lot of overtime, so the amount was different every week. Most of my fellow employees “drank” most of their check by the following Monday. My employer did not even give a stub.
  • Direct deposit every other month – this was a strange set-up as well. The work was sporadic, so I never knew exactly how big the check was actually going to be.
  • Bi-weekly direct deposit on Wednesdays – there were two months out of the year where the dates fell so that I would get three checks instead of the usual two checks per month.
  • Paper check every 1st and 15th – pretty normal. In ten years of working (part-time) for this employer, I only lost one paper check before I could make the deposit.
  • Last weekday of the month – just started this one. I’m not sure what I think about it.

Technically, our pay period should not affect our budget, but I think that payday frequency can have an effect on how well the monthly budget is followed. If I had the choice, I prefer to be paid every two weeks. I think that it makes us plan our spending, but if we have problems, relief is in sight.

I find that a weekly pay period can encourage bad habits with your money. It is just too easy to waste a little here and there when you know that the next payday is just around the corner.

Currently, I am paid on the last weekday of the month. Even though our monthly take-home pay is the same whether there are one, two or four weeks between pay periods, I find that a single monthly check has been the hardest to deal with. To make things more difficult, our monthly budget is still feeling the effects of our move and our expense patterns have not quite settled into a routine. When we get in a pinch in the middle of the month, it is too easy to look to a credit card for a temporary fix. I plan to spend a day in the near future to bring back budget discipline. The FNBO Direct online billpay has help to bridge some of the gaps. Having our bills paid from our savings account helps us to maximize float interest and smooth over small budget surpluses and deficits.

Does the timing of your payday affect your budget habits?

  1. 12 Responses to “When is payday?”

  2. By Deamiter on Aug 4, 2008 | Reply

    I think it’s interesting that companies have largely moved salaried employees from being paid every two weeks to being paid every month or even every two months. It certainly saves the company money, but it’s quite a bit less convenient for us grunts!

    I get paid once a month, and I don’t find that it affects my spending except that I schedule certain bills to debit my account after payday as an extra bit of safety against overdrafts.

    The key is that spending can’t be linked in your mind to how much money you have or how much you will have. Your spending needs to be tied to how much you PLAN to spend. About half my earnings goes to saving and investments at the moment and that would be totally impossible if I considered ‘affordable’ to be ‘how much I have in my checking account’ rather than ‘how much will I value that purchase?’

  3. By rocketc on Aug 4, 2008 | Reply

    Interesting comment and way of looking at things. . . We are currently running a monthly deficit, so payday timing might be more important to us because of that.

  4. By plonkee on Aug 4, 2008 | Reply

    Hmm. It’s most common in the UK to be paid monthly, like you I get paid on the last weekday of the month. In order to take full advantage of this, I’ve tried as far as I can to get all my automatic payments to happen at the beginning of the month – I barely get a chance to miss the money.

  5. By SingleGuyMoney on Aug 4, 2008 | Reply

    I no longer live paycheck to paycheck but I don’t think I would like being paid once a month. I’ve been paid every other Thursday for the last 8 years and I look forward to those 2 paychecks each month. If I had to switch to a once a month pay schedule, it would be a little difficult at first but I would get used to it.

  6. By rocketc on Aug 4, 2008 | Reply

    Ideally, we should be able to only get paid once a year . . . if we are following a budget.

  7. By hank on Aug 5, 2008 | Reply

    I’m a bi-monthly payee. I don’t see any huge difference in it and I’ve had the same setups as you in the past, but the key is keeping to the budget. I can see how the weekly could get out of hand if you didn’t know where it was going, but like you say in the last comment, once a year if we’re following…

  8. By Another Personal Finance blog on Aug 15, 2008 | Reply

    I get paid once each week, and my wife gets paid once a month. It makes it really nice, because we are able to take care of some major monthly expenses and savings at the beginning of the month, and then manage everything else on a weekly basis.

  9. By FCL on Aug 17, 2008 | Reply

    If you have the choice it is better to be paid weekly rather than bi-weekly. Bi-weekly or monthly paycheques(which I have never heard of) are better for the company that you work for. It improves their cash flow at your expense.

  10. By Miranda on Aug 18, 2008 | Reply

    I get paid once a month — when I invoice the clients I’ve done work for. This can be a little rough on the cash flow at times, since I get paid at various times within a two week period, depending on when the companies do invoices.

    My husband also gets paid once a month — on the first day. So we often use his salary to pay the bills, and mine for every thing else.

  11. By Dawn on Sep 4, 2008 | Reply

    I get paid twice a month. I love it because I can’t always set the dates that my bills are due on, but inevitably they fall closer to one of the two days, so it makes it easier for me to plan. I could do once a month, but it would certainly take some getting used to!

  12. By Trisha on Sep 30, 2008 | Reply

    Yeah Right!!

    What economy do you live in?

  13. By Trisha on Sep 30, 2008 | Reply

    The previous comment was to rockete and hank’s getting paid once a year stance. The economy would cease to exist. Money makes the world go round.

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