A while ago, I asked readers which paycheck frequency would be best and here are the results!
Weekly (43%) – This is what I voted on (and also the most popular)! I feel that the more frequent my paycheck, the fewer days my money is on loan to my employer. It might drive my accountant crazy, but that’s a headache that falls under someone else’s responsibility! I can see that this is a problem for employees that are getting checks as their paycheck, but those people should really look into getting direct deposit through their bank. Nice, easy and most frequent gets my vote!
Bi-weekly (35%) – The standard of North American companies and almost just as popular as the weekly paychecks! I wonder how many people picked this option just because it is what they are used to (in which case they should have chose “I don’t care”). This option is also a good balance between monthly (which is too long in my view) and weekly (which might be too frequent for some).
Monthly (15%) – This is interesting because I would think that more people would choose a higher frequency than a monthly one. This option is great if your budget is done monthly because you can assign one paycheck to each month easily. This meant that there is one cash inflow each month, forcing you to plan more to spread out the spending (if you live paycheck to paycheck).
I don’t care (7%) – I thought that this percentage would be higher, because most people just don’t really bother with details like this. Maybe this number is biased because readers of personal finance blogs are more in tuned with money.
What did you choose and how do you interpret the data? You are welcome to discuss it here. Would you’ve picked some other choice if it was available? What if it was based on days (for example every 15 days) instead of every other Friday? I’d love to hear what you think as paychecks are most people’s primary income!
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{ 17 comments… read them below or add one }
That is an excellent article to write about. Kudos to you.
Personally, I am comfortable with bi-weekly paychecks. It actually helped me learn to regulate my money better than weekly payments ever did.
One thing to take into consideration is the customers who are purchasing for your company’s products or services. How much of that purchase is on credit?
Another thing to take into consideration is your company’s own credit line.
Both of these issues results in cash flow issues for your company. Your company then becomes like you, managing their budget on a monthly basis and ensuring sufficent cash flow to make sure you get paid.
With that in mind, I rather know my company will be there tommorow if it can manage their cash flow by paying me biweekly versus a company that may be gone tmw if they are unable to manage their cashflow with weekly paycheck.
Just a corporate penny for thought.
Excellent article again!
I prefer the weekly paycheck becaus eI can go ahead and allocate my savings in smaller amounts and it’s hardly noticed.
I stand in the 15% that voted monthly. Works for me, but I understand why some prefer a more frequent basis.
Mark: I think it is actually easier for the company to manage cash flow if the paychecks are more frequent. Just imagine that you have a $50 bill to pay each week instead of a $100 bill every 2 weeks. Isn’t the $50 bills easier to manage since the amount is smaller?
Laura: I agree. The more frequent the better. It keeps the inflows coming at all times.
My current job has monthly paychecks. I hated it at first – it def. took some time to get used to it. Now, I think its great. It forced me to allocate my money better, and to be more conscious of what I’m spending on. Nothing sucks more than living paycheck to paycheck, and running out of cash a week before you get your next installment!
Raj
PersonallyFinanced.com
I prefer bi-weekly paychecks, because I am used to being payed every other Friday. One company paid on the 15th and the 30th, but that really sucked because these days would fall on different days of the week on a month-to-month basis.
Raj: That actually is one of the great benefits of monthly. I’m glad it worked out for you as I would feel miserable if I had monthly paychecks
Natalie: I think I can see the pain as we usually think of days in terms of which weekday it is and not the day of the month!
Btw, what happened in Feburary?
You didn’t offer semi-monthly as an option. That’s been my favorite. Bi-weekly has those “extra” two paychecks but is hard to hard to budget around for monthly expenses.
Semi-monthly provides a regular paycheck but with a cycle that matches bills.
Katie: Does your company actually do this right now? Does the fact that it falls on different weekdays bother you like it does Natalie?
Coming from a person who has a few employees, monthly is definitely the way to go. It’s a lot easier to do Payroll 12 times a year than 26!
As an employee, Since I’m very financially stable, I’m happy getting paid once a month. It’s fewer transfers I have to send over to my savings account.
I am one of the people who don’t really care when I get paid, I get paid bi-monthly (15th & 30th)now and it works for me. I can’t really see why you would be miserable if you got paid monthly, it makes budgeting easier because you would have the whole month’s bills and the budget completed in one sitting (or atleast the money allotted for the bills), not twice or four times a month. To me, that sounds like much more to be miserable about. I do see your point about your money being “on loan” if the paychecks are less frequent, though. I never thought of it that way.
FinanceIsPersonal: Do you hear your employees ever complianing about this? I’m sure it’s much easier for you if you do this less frequently though.
Ashley: Actually my company pays bi-weekly and pays 1 week late. So for example, if I get paid tomorrow Nov 9 (Friday), then my paycheck is for Oct 22nd to Nov 2 so the loan is worst!
In the UK its not common for people in salaried jobs to be paid anything other than monthly. I think it would be more confusing to be paid more frequently, as it is, I just have all my bills go out the day after payday.
Here in Canada (or maybe just my province) I think it’s the law that you must get paid bi-weekly.
But I know that in a lot of countries around the world, monthly is more common. I have heard from people that having monthly paycheques forces you to budget better because you need to make it to that next paycheque.
I have gotten paid monthly before and I prefer more frequent payments. That way, there is always income coming in and it doesn’t allow you to think that you’re richer than you actually are. Seeing your bank account go up $2000 at the end of the month will tend to do that instead of $500 a week or $1000 every two weeks.
plonkee: I see lots of benefits of monthly paychecks but I just can’t bring myself to letting go of the fact that all my money is on loan
It’s interesting that North Americans are usually the people who get anything but monthly paychecks and we are the ones with the highest debt per person on the planet!
Matt: You bring up a good point. I really wonder if people will feel rich since they will probably get used to see that amount every last day of the month.
My only monthly paycheck experience was a summer job though and the amount was pretty small so I really don’t know!
I do like weekly (my wife is paid weekly). I do think getting the same amount in smaller amounts over time helps save money in the long run – I would use the analogy of having one large portion of a favorite food on sunday vs. having that divded up into smaller portions doled out once a day. I do believe I’d be more apt to gorge myself on that sunday.
Webomatica: That is a good analogy
Maybe it’s because I like weekly payments too that I tend to agree with you too 