What Is The Half-Payment Method?

A budgeting strategy that’s effective for some people won’t be effective for everyone. However, if you’re struggling to make ends meet each paycheck, the half-payment method might be the right budgeting option for you. Although you’ll still have the same bills to pay, the half-payment method can create some financial breathing room throughout the whole month.

Let’s take a closer look at the half-payment method and why it might be the right choice for you.

What Is The Half-Payment Budget Method?

With the half-payment method, you split your monthly recurring bills in half. If you’re paid on a biweekly schedule, you’ll set aside half of the bill’s payment so you’re ready when the full payment is due.

The goal of the half-payment method is to spread out your expenses so you don’t overspend during a particular pay period. For example, if most of your expensive bill payments are due at the end of the month, it could be easy to accidentally spend the funds you need to cover your bills.

Making this mistake could then force you to cover other necessary expenses, like groceries, with your credit card. You can avoid this scenario with the careful use of the half-payment method.

How Does The Half-Payment Method Work?

Although you could physically pay half of your bill with each paycheck, that’s not an option for every lender or bill provider. If you can’t pay half of your bills each paycheck, then set aside the funds in a safe place.

You’ll likely want to put these funds in a secure spot where you won’t be tempted to spend them. Consider opening a separate checking account or withdrawing the funds in cash to set up a budget envelope system for your bill payments.

Half-Payment Method Example

The method sounds great in theory, but let’s put it to practice. For example, let’s say your take-home pay is $2,500 and you’re paid on a biweekly basis.

Here are the bills you have to cover each month:

• Rent: $800 due on the 1st of the month
• Car payment: $100 due on the 10th of the month
• Utilities: $100 due on the 15th of the month
• Child care: $300 due on the 30th of the month
• Credit card debt: $250 due on the 20th of the month
• Internet: $50 due on the 1st of the month

Payment Schedule Using A Monthly Budget

If you used an average monthly budget and paid the bills as they’re due without using the half-payment method, here’s what it might look like:

$1,250 Paycheck On The 15th

• Utilities: $100 due on the 15th of the month
• Child care: $300 due on the 30th of the month
• Credit card debt: $250 due on the 20th of the month
• Total payments due: $650
• Money left: $600

$1,250 Paycheck On The 30th

• Rent: $800 due on the 1st of the month
• Car payment: $100 due on the 10th of the month
• Internet: $50 due on the 1st of the month
• Total payments due: $950
• Money left: $300

As you can see, you have funds left over at the end of each pay period. However, you have double the amount of funds left over in the first pay period of the month. Therefore, you might overspend in the first part of the month and feel some financial pressure until receiving your next paycheck.

Payment Schedule Using The Half-Payment Method

Let’s take a look at the same numbers and see how your bills might be paid using the half-payment method:

$1,250 Paycheck On The 15th

• Rent: $400
• Car payment: $50
• Utilities: $50
• Child care: $150
• Credit card debt: $125
• Internet: $25
• Total budgeted: $800
• Money left: $450

$1,250 Paycheck On The 30th

• Rent: $400
• Car payment: $50
• Utilities: $50
• Child care: $150
• Credit card debt: $125
• Internet: $25
• Total budgeted: $800
• Money left: $450

With the half-payment method, you’ll enjoy the flexibility of having your extra funds spread evenly throughout the month. You won’t overestimate the funds you have to spend on extras in the first half of the month.

Instead, you’ll still have the funds you need to live comfortably at the end of the month and potentially put toward financial goals like paying down credit card debt or building your savings fund. 

How To Budget Your Money Biweekly With The Half-Payment Plan

If you’re interested in using the half-payment method, you should start by taking a look at your monthly expenses. After you split these payments in half, start setting aside the funds you’ll need with each paycheck.

In some cases, you may not be able to dive into the method right away. Instead, try setting aside half of the smallest bill first. In the example above, you’d set aside $25 for your internet bill (the smallest of the bills) and gradually work up to saving all of the half-payments with each paycheck.

Pros Of The Half-Payment Method

Managing your money with the half-payment method comes with several advantages.

• The ability to more effectively manage your funds: You’ll know exactly how much money is being taken out of each paycheck to cover your bills. Likewise, you’ll know how much disposable income you have left over to save, cover debt payments or spend.
• A smaller chance of overspending: The half-payment budget method can reduce the need to splurge or overspend with the extra money in your account in the middle of the month. 
• Decreased pressure of living paycheck to paycheck: The half-payment method can  relieve the anxiety to make ends meet toward the end of the month. This budgeting strategy can also help break the cycle of living paycheck to paycheck.
• Less credit card spending and debt: With more cash left in your budget throughout the month, you’re less likely to use your credit card to make it through a tight financial spot. This can also help reduce your overall credit card debt. 
• More control over your finances: You might find that you feel more in control of your budget with this approach. That confidence can help you work toward financial goals, like building your emergency fund or saving money for a family vacation.

Cons Of The Half-Payment Method

The half-payment budget method can also come with a few downsides. Below are some common drawbacks of this budgeting strategy.

• Setup time: It’s best that you get ahead by at least half a month before you start splitting your bills. It can be overwhelming to jump in right away, especially if it’s not the beginning of the month and you’ve already paid a few of your monthly bills in full.
• The need for organization: You’ll need to pay close attention to your budget with each paycheck and account for any changes to your income or monthly bills.
• The need for discipline when budgeting: It can be tempting to spend the money in your checking or savings account that’s meant for a bill later on in the month. The half-payment method can require a lot of discipline when budgeting your money. 
• The possibility that the half-payment strategy may not work for you: Like with any budgeting technique, the half-payment method isn’t right for everyone. For example, it can be more difficult to utilize the half-payment strategy if you’re only paid once a month.

The Bottom Line

The half-payment budget method is an approach to paying bills that essentially means you pay half now, half later. It’s a great way to ensure you cover all of your bills and still maintain a consistent amount of disposable income.

Budgeting with the half-payment method may be even easier with the Rocket Money℠ app. The app displays your monthly bills as well as your recurring expenses. As a result, you know exactly how much money you typically spend on groceries, shopping, transportation and other costs – which can help when budgeting no matter what method you use.

To see the bigger picture on your personal finances, download the Rocket Money app today.