Bills Got You Feeling Pinched? Try the Half Payment Budgeting Method

Woman working at home doing home finances.
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In a perfect world, bills would be evenly distributed so you wouldn’t pay so much at the beginning of the month and be left eating ramen until the next payday rolls around.

But if that’s not the case for you, there’s a way to hack your budget so you end up paying the same amount for fixed bills with each paycheck. It’s called the half payment budgeting method.

Managing Money Using the Half Payment Method

The half payment method splits the cost of your fixed bills in two so one paycheck covers one half your expenses and the next paycheck covers the other half.

This method is great for budgeters who get paid every other week or twice a month.

During the pay period prior to when a bill is due, you’ll set aside half the cost of the payment. When it’s time to pay, you won’t be struggling to come up with the entire amount from  your most recent paycheck. You’ll only need half, which you’ll add to the money you previously set aside.

Saving the advance half payments in a separate checking account strictly for bills or withdrawing the money to save in a cash envelope will help you avoid spending it before the bill is due.

If your landlord, service provider or creditor accepts partial payments, you can pay half your bill directly to the company during the prior pay period and pay the remaining half on the due date.

Let’s compare the differences between traditional budgeting and half payment budgeting. In this example, your monthly take-home pay is $3,200. You get paid twice a month, on the 1st and the 15th, and your monthly fixed bills are as followed:

  • Rent: $925 due on the 1st
  • Child care: $600 due on the 1st
  • Water bill: $50 due on the 5th
  • Student loan: $150 due on the 15th
  • Phone: $75 due on the 17th
  • Car note: $300 due on the 20th
  • Internet: $75 due on the 20th
  • Credit card: $200 due on the 22nd
  • TV streaming service: $15 due on the 25th
  • Car insurance: $100 due on the 30th

Budgeting traditionally would look like this:

Paycheck #1: $1,600

  • $925 for rent
  • $600 for child care
  • $50 for the water bill

You’d have just $25 left over  during this pay period.

Paycheck #2: $1,600

  • $150 for student loan repayment
  • $75 for phone
  • $300 for car note
  • $75 for internet
  • $200 for credit card payment
  • $15 for TV streaming service
  • $100 for car insurance

You’d have $685 left over.

(Since the half payment method focuses only on splitting fixed expenses, this hypothetical budget doesn’t reflect variable expenses, like groceries, gas, electricity and discretionary spending.)

It’s not easy to stretch $25. This scenario often lands people in a continuous debt cycle, turning to credit cards each month to pay for basics like food or fuel.

Having more money to spend in the second half of the month doesn’t guarantee there will be plenty to roll around to the next month. You might get a little spendthrift after eating all that ramen, and anything you charged will have to be paid for.

The half payment budgeting method looks considerably different.

Paycheck #1: $1,600

  • $462.50 for rent
  • $300 for child care
  • $25 for the water bill
  • $75 for student loan repayment
  • $37.50 for phone
  • $150 for car note
  • $37.50 for internet
  • $100 for credit card payment
  • $7.50 for TV streaming service
  • $50 for car insurance

You’d have $355 in excess during this pay period.

Paycheck #2: $1,600

  • $462.50 for rent
  • $300 for child care
  • $25 for the water bill
  • $75 for student loan repayment
  • $37.50 for phone service
  • $150 for the car note
  • $37.50 for internet
  • $100 for credit card repayment
  • $7.50 for TV streaming service
  • $50 for car insurance

You’d have the same amount — $355 — left over.

Your leftover money is more evenly distributed to cover all those variable expenses, and you might even realize you have extra money to toss into a savings account.

Pro Tip

If you’re paid weekly, tweak the half payment method to become the quarter payment method, and use each paycheck to cover one-fourth of your regular fixed expenses.

How to Be Successful With the Half Payment Method

In order to make this money management strategy work, you’re going to need a little wiggle room in your budget.

Having a half-month worth of bill payments sitting in your checking account is good. Having enough money to cover an entire month of payments is even better.

If you don’t have excess money in your account, try a slow transition to the half payment method. Take it one bill at a time.

Using our hypothetical example above, you might find it easiest to start with the smallest bill — the $15 monthly charge for TV streaming service. Set aside $7.50 in the beginning of the month (or at the end of the previous month when you have a greater surplus of income).

Once you’ve gotten in the habit of dividing your smallest bill in two, tackle your next lowest expense — the $50 water bill. Follow this pattern until you’ve got all your monthly fixed bills under this system.

Pro Tip

Funnel any financial windfalls, like a bonus, toward your advance half payments. Or if you’re paid biweekly and land in a month with three paychecks, set aside that third check.

Nicole Dow is a senior writer at The Penny Hoarder.