Half Payment Budget Method (Money Saving Techniques)

Half Payment Budget Method (Money Saving Techniques)

If you feel like your salary goes straight to bills, payments, and other monthly necessities, and you get paid biweekly, the ‘half payment budget’ money-saving technique can help you pay your bills on time while still saving for your future. 

Many people have used this method to stop living paycheque to paycheque, pay their bills on time, get out of debt, and save substantially.  

So whether you’re a beginner learning how to budget and save money, or currently on a low income and finding it difficult to save, this could possibly be one of the money-saving techniques that helps you take control of your finances.

Part of your personal development journey will include managing your finances correctly therefore, learning about different money saving techniques is a great way for you to get started.

By mastering your finances, and finding a budgeting method that works for you (there are many others like the 50 /30/ 20 budget rule or the 70 /20/ 10 budget rule), you will eventually have the freedom/ ability to be more flexible with your money/ spending habits – which is what we all want, right? 

If you’re a beginner at saving/ budgeting and want some money saving techniques and ideas on how to manage your finances so you are in control of it rather than the other way round, these posts will help you: 

Monthly Budget Advice For ‘Spendaholics’

What Successful People Do To Get Rich and Stay Rich

 

What is the Half Payment Budget Method?

The half payment budget method is best for those who get paid twice a month instead of once a month.  

This method involves setting aside half your salary on each pay day in the month (so two pay days) for your bills and then setting aside the other half for your spendings/ savings. 

This money-saving technique makes it possible to save whilst making sure your bills are covered so you don’t need to scrounge around your pockets at the end of the month to pay them off. 

Still confused? Let’s use an example to break it down more.

 

Let’s say your monthly income is about £2,500 per month and your bills/ rent (not including entertainment, food, savings etc.) is about £1,400. This leaves you with roughly £1,100 left for the month. 

If you get paid twice a month, depending on when your specific bills get taken, you could easily get into a deficit. 

So, splitting £2500 in half to get the biweekly payments, you will be paid £1,250 on each pay day.

But, let’s say in the first two weeks of the month, your rent is due, your car insurance payment is due, and your phone bills and other main bills are due and this adds up to £1,300 – this means you have exceeded your first paycheque by £50. 

On the other hand, when you get your second paycheque (£1,250), all you need to pay is your gym subscription and internet subscription and that adds up to about roughly £100 only, meaning you have £1,150 left to save/ spend. 

So, to tidy that up, here is what you are left with in the month:

 

Paycheque 1: £1,250 

Rent: £1,000 

Phone bill: £60 

Car Insurance: £240 

Total remaining: -£50 

 

Paycheque 2: £1,250 

Gym: £50 

Internet: £50 

Total remaining: +£1,150 

 

Sure, the second paycheque looks great, but this current routine means you will be scrambling for the first two weeks every month to pay all your bills on time (and there’s also no money for foods… yikes).

And yes, you could just reserve some of the money in the second paycheque for the next month’s big payments. But realistically, if the money is just sitting in your current account and not your savings, do you think it’ll stay there for long. Really? 

What you need to do instead is manage your finances better and allocate your money ahead of time.

This is where the half payment money saving technique will help your balance your finances and ensure you can pay your bills at the beginning of the month without turning into a bank robber, while have money left over to spend it how you want! 

 

Related:

 

 

Half payment budget method example 

Paycheque 1: £1,250 

Rent: £500 

Phone bill: £30 

Car Insurance: £120 

Gym: £25 

Internet: £25 

Total remaining: +£550 

 

Paycheque 2: £1,250 

Rent: £500 

Phone bill: £30 

Car Insurance: £120 

Gym: £25 

Internet: £25 

Total remaining: +£550 

 

As you can see with this method, you never fall into a deficit on either payday, and can save/ spend the remaining money comfortably. 

This is because you are reserving half of the money that will have to go towards all the bills on each payday, beforehand.

This will make it easier for you to pay for your other necessities like groceries, entertainment and savings, and allow you to have peace of mind as you know you will end up with roughly the same amount of money every two weeks.  

Similarly, you could do this method if you get paid weekly! But instead of splitting your bills in half you would do it by four, and set aside a quarter of the money for the bills every week.  

 

 

Preparation 

With the half payment method, you would have to stay half a month ahead so that you have the money ready for the bills. 

So say, most of your bills are due in the first week of the month, you would want to prepare your half payments at least two weeks beforehand.

 

Here’s an example:

August 1st: Payday – Paycheque 1 (£1250)

August £15th: Payday – Paycheque 2 £1,250 – keep aside £700 for bills and £550 for yourself 

August 29th: Payday – Paycheque 3 £1,250 – keep aside £700 for bills and £550 for yourself 

Main Bills due: 2nd – 10th September: £1,400 – ready to be paid from your half payments from the last two weeks 

 

It is definitely something you will have to get used to. It may be best to practice this method with one bill first and then if it works for you, slowly start using the method with the rest of your bills.

A great way to stay prepared before you start using this budget rule is to write down a full list of all your bills and expenses as well as the due dates for all the bills so that you know the time period you’re working towards. 

To make things simpler, transfer half of your payment to another card and use that as your ‘spending card,’ to ensure you don’t touch the money that will go towards your bills.  

Having another bank account ready for your bill payments/ spendings/ savings will be effective in keeping these actions separate – one you have to give away, one you use for fun, and one you save for the future – managing this all in one card will take more willpower than any superhero out there. 

But overall, I hope you can see how this money saving technique allows consistency in your finances so that you know what to expect rather than feel anxious every time you need to pay your bills.

 

 

 

Key Points – Half Payment Budget Method (Money Saving Techniques)

• If you feel like your salary goes straight to bills, payments, and other monthly necessities, and you get paid biweekly, the ‘half payment budget’ money-saving technique can help you pay your bills on time while still saving for your future.
• The half payment budget method is best for those who get paid twice a month instead of once a month.
• This method involves setting aside half your salary on each pay day in the month (so two pay days) for your bills and then setting aside the other half for your spendings/ savings.
• It may be best to practice this method with one bill first and then if it works for you, slowly start using the method with the rest of your bills.
• A great way to stay prepared before you start using this budget rule is to write down a full list of all your bills and expenses as well as the due dates for all the bills so that you know the time period you’re working towards.
• To make things simpler, transfer half of your payment to another card and use that as your ‘spending card,’ to ensure you don’t touch the money that will go towards your bills.