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Let’s say you had a job as a cashier at your local grocery store that paid every two weeks. You quit that position and got a new job in an office, but this one pays once a month instead. What gives?

There are different kinds of pay schedules that determine when and how often you receive your paycheck. Businesses usually set their pay schedules to benefit themselves. Payroll management entails labor and costs, so companies will go for the option that is more convenient and saves them money. 

Employees (as opposed to freelancers) don’t normally get to decide how often they get paid, so it’s critical to factor your pay cycle into your weekly or monthly budget, especially if you live paycheck to paycheck. Will you have your money when you need it?

Here are four common types of pay schedules:

Kinds of Pay Schedules

Weekly Payroll

Some businesses pay their employees weekly, which means employees receive their income on Fridays. This schedule is more common amongst freelancers, contract workers, and trade industries like construction and manufacturing. These job types commonly have irregular hours, so it makes sense to pay workers according to a shorter time frame.

While weekly schedules are a favorite amongst employees because it means you have more regular access to your money. If you drained your bank account on bills last week because it was the end of the month but want a night out with your friends, no worries — you get paid on Friday, so you can afford that night out as long as you save enough for your upcoming expenses.

However, most businesses avoid the weekly system. Payroll vendors frequently charge money every time a company (their customer) runs payroll. Doing so weekly takes extra time to process, so companies will opt for more extended periods to reduce costs and add convenience.

Bi-Weekly Payroll

A bi-weekly pay schedule means you receive your paycheck every two weeks. This cycle amounts to 26 or 27 paydays per year. Many businesses prefer bi-weekly timelines because they save money processing payroll and can calculate overtime more easily (each paycheck accounts for approximately 80 work hours). As such, bi-weekly payroll is more common amongst businesses that pay their employees hourly.

Bi-weekly schedules are not challenging to manage, but two months out of the year will have three paydays instead of two. Accountants need to factor in these paydays when calculating voluntary employee deductions, like healthcare, which are equal in a bi-monthly pay schedule.

Bi-Monthly Payroll

Bi-monthly pay means your employer pays you twice per month, also known as semi-monthly. As such, you might receive your income on the first of and in the middle of the month (likely on the 15th), or in the middle and end. A bi-monthly pay schedule entails 24 payments per year, which makes it distinct from bi-weekly. If you earn $45,000 per year on a bi-weekly cycle, your paychecks (not accounting for taxes and deductions) will be around $1730.77 each, whereas your paychecks will equal $1,875 on a semi-monthly schedule. It’s the same amount of money but divided differently.

Bi-monthly payroll is common for salaried employees. Calculating deductions is easy for accountants, and you always know which dates you will receive your income.

Monthly Payroll

You guessed it — monthly payroll means your paycheck comes in once a month. This format is ideal for businesses because it makes accounting easy and reduces processing costs, but it’s disadvantageous for employees and contractors because they have less frequent access to their money. If you work a job that pays monthly, you need to be extra careful with budgeting because you’ll only receive your income in lump sums 12 times per year.

How Does Your Pay Schedule Affect You?

Your pay schedule does not affect how much you get paid in a year, assuming you work the same number of hours either way. However, your pay cycle does influence how often you have access to your hard-earned money, and therefore the way you budget.

For example, let’s say you paid all your bills last month and now don’t have much left in your savings. Your job pays you bi-weekly, so you’ll have enough money to pay the first round of next month’s expenses, but your next paycheck won’t arrive in time to pay the rest. Now you’re in a tight spot.

One option is to make an early paycheck request from your employer. If your employer agrees, they will provide you all or part of your paycheck before they usually would, allowing you to pay your bills, but it lengthens the time between your next paycheck.

Another option is to use financial apps. Your job’s pay cycle is out of your hands, but you can control when you get paid with apps like Earnin. Earnin allows you to take out up to $500 of your earnings per pay period. This way, you won’t have to worry about missing a bill because your employer’s pay schedule isn’t in your favor, and you won’t have to pay mandatory fees for convenience.

Your pay schedule affects your ability to pay expenses and for recreation, so it’s important to know how often you’ll receive your income when applying for a job or managing your finances. Though your pay cycle might not always work in your favor, there are ways you can control having access to your money.

Restrictions and/or third-party fees may apply, see Earnin.com/TOS for details.

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