Is it better to get paid twice every month (bi-monthly) or at the end of evey two weeks (bi-weekly)?

[her209]

Assumptions:

- Annual take-home salary of $24,960 after taxes, etc.
- Except for February, bi-monthly payments will be made on the 15th, and the last day of the month.
- For February, payment will be made on the 14th and the last day of the month.
- All money earned is put into a savings account earning some percentage interest compounded daily.

Definition of "better" meaning "which ever earns the most interest at the end of the year."

I say its better to get paid bi-monthly because on the Jan 15th, you'd have $1,040 in your bank account where as you'd only have $960+(interest for 1 day).

 

[halik]

bimonthly = every 2 months...

Obviously the earlier/more often you get paid, the more interest you can compound.

 

[simms]

you are thinking of twice a month and biweekly. it would barely make a difference but biweekly is better. You will have more pay periods over time.

 

[her209]

Originally posted by: halik
bimonthly = every 2 months...

Bi-monthly can mean either. I have defined the context of its usage in the thread title.

Obviously the earlier/more often you get paid, the more interest you can compound.

There in lies the issue. Get paid more less often or less more often.

 

[Shawn]

bi = 2

as in bisexual, binomial, etc.

 

[poncherelli2]

It can be used either way, but the preferred usage is for every two. Bicentennial was 1976, 200 years

Twice in a period is usually referred to as semi-.

 

[JS80]

It's much easier for accounting to have it semi-monthly

 

[Kalvin00]

weekly ftw

 

[nageov3t]

I've done every two weeks and I've done twice a month (15/30 or the closest friday if they call on a weekend)... really not much difference.

my only beef with 15/30 is that I pay my credit card on the 15th and rent's due on the 30th, so I've got to be sure to really watch the balance and move money from savings into checking temporarily if it looks like the rent check might clear before my paycheck.

 

[Kenazo]

I prefer biweekly. Helps with the cash flow.

 

[ShockwaveVT]

bi-weekly is preferable. Most of the time you get 2 paychecks a month so that is what you wind up budgeting for. Then every 6 months you land an extra paycheck, great for pumping up the savings account or funding a vacation.

 

[aceO07]

I get it weekly and direct deposited. The earlier it's in my bank, the sooner I get interest on it.

 

[Mo0o]

wouldn't it be semi-monthly?

 

[Scarpozzi]

I prefer bi-monthly because my non-living expense bills come in monthly. It would help me to budget money if I was paid a little extra fewer times.

Currently, I'm paid monthly....if that explains why I would stick with this. Prior to my current job, I was paid weekly... It was nice getting money at the end of the week, but it's a heck of a lot easier for me to manage bills becuase I have a lump sum to distribute in the first week of the month. I then get to stretch the remainder into 3 weeks.

 

[Schfifty Five]

LOL, no one is addressing OP's question.

This thread isn't about what you prefer in terms of frequency of pay.

This thread isn't about the definition of bi/semi/every two/etc.

This thread IS about what nets you more $ at the end of the year per OP's conditions.

 

[Leros]

Originally posted by: Schfifty Five
LOL, no one is addressing OP's question.

This thread isn't about what you prefer in terms of frequency of pay.

This thread isn't about the definition of bi/semi/every two/etc.

This thread IS about what nets you more $ at the end of the year per OP's conditions.

"Obviously the earlier/more often you get paid, the more interest you can compound."

First response seems to sum it up.

 

[ShockwaveVT]

Originally posted by: Schfifty Five
LOL, no one is addressing OP's question.

This thread isn't about what you prefer in terms of frequency of pay.

This thread isn't about the definition of bi/semi/every two/etc.

This thread IS about what nets you more $ at the end of the year per OP's conditions.

This is ATOT where the mission is to take every off-topic thread off topic!

 

[Eeezee]

52 weeks = 26 paydays
12 months = 24 paydays

More paydays > fewer paydays if you're investing every penny. That's obvious. Start a savings account after 2 weeks vs after 2.5 weeks. The savings account started sooner gets more money overall. On top of that, you're investing more frequently (albeit you invest less money, but you'll still come out ahead)

 

[mugs]

Honestly.... I think the difference is going to be negligible. Maybe at the end of the year you end up with enough money to buy a sandwich with the difference.

 

[cubby1223]

Originally posted by: her209
Assumptions:

- Annual take-home salary of $24,960 after taxes, etc.
- Except for February, bi-monthly payments will be made on the 15th, and the last day of the month.
- For February, payment will be made on the 14th and the last day of the month.
- All money earned is put into a savings account earning some percentage interest compounded daily.

Definition of "better" meaning "which ever earns the most interest at the end of the year."

I say its better to get paid bi-monthly because on the Jan 15th, you'd have $1,040 in your bank account where as you'd only have $960+(interest for 1 day).

Seriously, you're talking about at most an extra quarter per month one way over the other. It's negligible in any real life scenario.


And everyone else, get a grip:
bi·month·ly Audio Help /ba?'m?n?li/ Pronunciation Key - Show Spelled Pronunciation[bahy-muhnth-lee] Pronunciation Key - Show IPA Pronunciation adjective, noun, plural -lies, adverb
?adjective
1. occurring every two months.
2. occurring twice a month; semimonthly.

 

[Leros]

If you're living paycheck to paycheck or have trouble managing your money, having payments more often would be better since it would force you to even out your spending.

 

[gsethi]

As a small business owner, I pay semi-monthly (twice a month). It makes accounting very much easier. Also, saves a lot of headache when its time to do Quarterly Wage reports for IRS/State and even saves further headache at the end of the year. (If I did bi-weekly, then I would have had to split the last weeks for quarterly/yearly reports and would just make it slightly more cumbersome).

 

[Injury]

From a tax standpoint, it's probably better to get small chunks of change more often. I dunno exactly how that all works out, though.

 

[dullard]

Best answer: it doesn't matter mathematically for your "more interest" definition, but it can matter significantly if you are living paycheck-to-paycheck.

1) The sooner you get paid, the more interest you make. At 3% interest, and if you saved every single penny (no spending at all for a year), you'd end up with $1.24 more when you are paid every two weeks. That won't buy you much at all. If, in reality, you spend some portion of your money, that $1.24 plummets to near $0.00.

2) The smaller your paychecks, you might get taxed a slightly bit less but you will have to pay more at tax time to make up the difference. Again, the difference is so negligible that it isn't worth considering.

3) If you can't save your money well, you MAY perfer the every two weeks method. This is because it forces you to live on less each month, and then about every 6 months you get a "bonus" paycheck.

For example, in the five months with the every two weeks method, you will get paid $960*2 = $1920 per month. But on the sixth month, you will get paid $960*3 = $2880. That "extra" $960 was the money that you weren't getting earlier and many people like this "extra" paycheck to save or to splurge on a big ticket item.

4) If you are living paycheck-to-paycheck, you MAY perfer the twice a month method. That is because with twice a month, you always get 2*$1040 = $2080. $2080 is a heck of a lot easier to live on than the $1920 you'd get most months with the other method.

Originally posted by: cubby1223
And everyone else, get a grip:
bi·month·ly Audio Help /ba?'m?n?li/ Pronunciation Key - Show Spelled Pronunciation[bahy-muhnth-lee] Pronunciation Key - Show IPA Pronunciation adjective, noun, plural -lies, adverb
?adjective
1. occurring every two months.
2. occurring twice a month; semimonthly.

Exactly. The "bi-" anything words are worthless because they all have two definitions (double and/or half of the amount). Use the full phrase "twice a month" and no one will ever be confused. If you refuse to do that, then at least use "semi-monthly" as that has only has one definition.

 

[IGBT]

Originally posted by: Kenazo
I prefer biweekly. Helps with the cash flow.

..and the 401/457.