The Paycheck Budgeting Method

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Your financial life is planned around your paychecks, shouldn’t your budget be too?

The Paycheck Budgeting Method is the EASIEST way to take control of your money when nothing else seems to work.

The concept is simple.

  • Write down your next paycheck amount
  • Write down ALL the bills that are due until the next paycheck arrives
  • Write down daily spending until next paycheck arrives
  • For Paycheck #2, rinse and repeat

But how does this work in reality? And how do you get started in the middle of the month?

Let’s break down each step, and help you start budgeting your paychecks today!

Paycheck Budgeting

Step 1: Write Down Your Paychecks

You are already working, getting paid on a regular schedule. For most, this is the bi-weekly paycheck, for some it’s weekly, or twice a month.

The first step is to write out WHEN you are getting paid next, and HOW MUCH you expect that paycheck to be.


Mary and Mark get paid Bi-weekly.

Paycheck #1 Amount Pay Date
Mary Paycheck #1 $1,200 8th
Mark Paycheck #1 – $1,200 8th
Total Paycheck #1 $2,400  
Paycheck #2 Amount Pay Date
Mary Paycheck #1 $1,200 22nd
Mark Paycheck #1 – $1,200 22nd
Total Paycheck #1 $2,400  

So starting on the 8th of this month, Mary and Mark have $2,400 to budget for the next 2 weeks.

Then for Paycheck #2, they have $2,400 starting on the 22nd of the month to budget for the following 2 weeks

Step 2: Write Down All Monthly Bills (and Due Dates!)

Now it’s time to write out ALL your monthly bills, and write down the due dates for each.

This will help you visually see how well your month is balanced, and allow you to split your bills between each paycheck.


Bill Amount Due Date
Mortgage/Rent $1,200 1st
Electric $80 1st
Car Payment $500 1st
Natural Gas $100 8th
Water/Sewer $80 12th
Garbage $40 15th
Internet $50 18th
Car Insurance $100 18th
Cell Phone $100 21st
Credit Card 1 $200 27th
Netflix $14 28th
Total $2,464  

This quick snapshot of your monthly bills is powerful.

You can see that a majority of their money toward bills happens in the first half of the month, so they need to budget accordingly.

Money Tip: Did you know you can CHANGE your billing due dates? Outside of your Mortgage/Rent payment, most ALL bills can have their due dates adjusted. Simply call the company and ask if you can move the date. DO THIS if you find that one half of the month has MORE bills, and help balance your payments out during the month.

Step 3: Write Down Your Daily Expenses

Now that you have a picture of your income and bills, you need to write down your Daily Expenses.

This includes things like:

  • Groceries
  • Gas
  • Restaurants
  • Household
  • Clothing
  • Etc.

You will need to split these expenses between paychecks to ensure you have the money needed.


Category Monthly Bi-Weekly
Groceries $600 $300
Gas $300 $150
Restaurants $200 $100
Entertainment $150 $75
Spending Cash $150 $75
Pets $100 $50
Household $100 $50
Misc $200 $100
Totals $1,800 $900

As you can see, Mary and Mark will need $900 allocated for their DAILY EXPENSES for each pay period.

Step 4: Budget For Any Infrequent Expenses

This is where your Expenses Calendar (included our new Budget Binder) comes into play.

Take a look at your calendar for the month, and write down any expenses that are NOT part of your regular monthly bills and daily spending.

Expenses include:

  • Birthdays
  • Christmas
  • Weddings
  • Parties
  • Taxes
  • Travel

These expenses should be set aside in your savings, but if you don’t have the money set aside, then you need to budget for them from your paychecks.


Infrequent Expenses Amount  Date Paycheck?
Party $200 15th 1st

Mary and Mark are hosting a party at their house, and have set a budget of $200. The party is on the 15th, but they will need the FUNDS before, so they will allocate this amount on the 1st Paycheck.

Step 5:  Put It Together With The Paycheck Budgeting Worksheet

Now that you have written down all your income and expenses for the month, it’s time to split it out by paycheck.

Back to our example; Here’s what Mary and Mark’s month will look like:

Pay Period #1 Budget

Income Amount Date
Mary Paycheck $1,200 8th
Mark Paycheck $1,200 8th
Total Income $2,400  
Bills Amount Date
Natural Gas $100 8th
Water/Sewer $80 12th
Garbage $40 15th
Internet $50 18th
Car Insurance $100 18th
Cell Phone $100 21st
Daily Spending    
Groceries $300 8th
Gas $150 8th
Restaurants $100 8th
Entertainment $75 8th
Spending Cash $75 8th
Pets $50 8th
Household $50 8th
Misc $100 8th
Other Expenses    
Party $200 15th
Total Expenses $1,570  

For paycheck 1, Mary and Mark had $2,400 available to spend, and $1,570 in total expenses.

This leaves them with $830 available until the next paycheck.

But they need to hang on to that extra cash to make sure they have enough for the next pay period.

See below:

Pay Period #2 Budget

Income Amount Date
Mary Paycheck $1,200 22nd
Mark Paycheck $1,200 22nd
Total Income $2,400  
Bills Amount Date
Credit Card 1 $200 27th
Netflix $14 28th
Mortgage/Rent $1,200 1st
Electric $80 1st
Car Payment $500 1st
Daily Spending    
Groceries $300 22nd
Gas $150 22nd
Restaurants $100 22nd
Entertainment $75 22nd
Spending Cash $75 22nd
Pets $50 22nd
Household $50 22nd
Misc $100 22nd
Total Expenses $2,894  

As you can see, this cycle of bills is MORE than they earned. They earned $2,400, and their expenses were $2,894.

Their pay period would have put them $494 in debt, had they not been on a budget.

But since they hung onto that $830, they simply use those funds to cover the gap, and put the rest toward their goals (debt payoff, investing, etc.)

This Budget Will Change Your Life

You can see how easy it would be to get into trouble VERY QUICKLY if they weren’t on a budget.

They might have felt SUPER RICH after the previous pay period and wasted the extra funds…..only to find they couldn’t make it through the next 2 weeks…..and end up going into debt.

This is the POWER of Paycheck Budgeting. You start to see the whole picture BEFORE it happens.

All of the numbers we see above were written down on paper BEFORE they got paid, so they knew EXACTLY what they needed to do with their money.

If you are living paycheck to paycheck and are TIRED of the constant stress of juggling bills, due dates, and life seems to ALWAYS stop your progress…..you need to try this method.

You can start EXACTLY where you are at today. No need to wait until the start of the next month.

Want to completely transform your money, and your life? Our brand new Budgeting Binder includes the Paycheck Budgeting worksheet, and Daily Expenses Tracker to put this budgeting method into practice!

Budgeting Binder - iHeartBudgets

Jacob Wade

Jacob Wade

Jacob Wade has been a nationally-recognized personal finance expert for the past decade. He has written professionally for The Balance, The Spruce, LendingTree, Investing Answers, and other widely-followed sites. 
He’s also been a featured expert on CBS News, MSN Money, Forbes, Nasdaq, Yahoo! Finance, Go Banking Rates, and AOL Finance.

In 2018, Jacob quit his job and his family decided to sell everything (including their home) to take off on an adventure. They traveled the country in an RV for nearly 3 years, visiting over 38 states, 20+ national parks and eventually settling in the sunshine state!

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