Simply put, the half payment budget method is taking your monthly expenses and splitting them into half. The reason this method is so popular is that most people get at least 2 paychecks every month, so it aligns nicely with most households’ routine. We simply set aside half the amount for each bill or expense and then when the payment is due in full the money is sitting there. It doesn’t matter if you use an app, a spreadsheet, or a pen and paper you can work this budgeting method into your current budgeting routine.
This method is very similar to sinking funds but on a smaller scale. We are simply breaking down larger bills into smaller more manageable chunks. This can help with cash flow and reduce large significant financial hits all at once. Much like sinking funds, the longer you stick with it the easier it becomes. This method can help you break the paycheck-to-paycheck cycle and help you to get a month ahead. If you are looking for more detailed information on sinking funds we did an entire article on them called “What Are Sinking Funds and How Do They Make Budgeting Easier?”
This budget method works nicely with the Ploutos Budget application which helps you keep track of your upcoming expenses and your current cash on hand. Ploutos Budget has “Quick Budget Actions” that allow you to budget half the month with a single click or tap.
You can and should be using this method for more than just your monthly bills. It is a useful tool for all of your monthly expenses. Let’s take the example of our monthly grocery budget. If we normally spend $600 on groceries each month then that is what we should budget for the month. That being said, we do not need our entire grocery budget on the first of the month. If you are like most households that receive at least 2 paychecks each month then with the first paycheck we will set aside $300 for groceries. That is the amount that we will be able to spend on groceries until we get our next paycheck where we can fully fund our grocery budget.
We can look at another example of a large monthly bill most of us have and that is our mortgage or rent. While it may take a couple of months of budgeting to get to the point where we are budgeting a month ahead, that is how we are going to tackle it. We can start by working our way to half a month ahead. Meaning we are going to set aside half of our mortgage or rent payment for the next month on our second paycheck of this month. Then on our first paycheck of the new month we only need half of the mortgage or rent money from that paycheck and it is fully covered.
By breaking your months down into these 2 chunks it can greatly reduce your stress and better prepare your household for upcoming expenses. Having a plan for your money is how you take control of your finances and start to win with money. There are many different tools and strategies to help you budget, so find the one that works best for you and just get started.
