THE SHORT · BUDGET
Budgeting on two pays a month makes you forget $4,062 a year
A year has twenty-six fortnights and twelve months. Two months a year get three pays — and a budget built on two treats them as a surprise instead of a given.
By the Yoseri News desk · · 2 min read
You are paid every two weeks. You build your budget on two pays a month, because that is what usually happens. It is right ten months out of twelve — and wrong over the whole year.
Twenty-six pays divided by twelve months is 2.17 pays a month. Not two.
| Per month | Over the year | |
|---|---|---|
| Your real income | $4,400.00 | $52,800.00 |
| Your budget, built on 2 pays | $4,061.54 | $48,738.46 |
| Gap | $338.46 | $4,061.54 |
The annual gap is exactly two pays. They do not vanish: they land in the two months that hold three, and they arrive there as a pleasant surprise.
That is where the budget takes its revenge. A sum you were not expecting almost always gets spent, and two pays spent as a bonus is 7.7% of your annual income that never had a destination.
Two dates worth noting at the start of the year: the two three-pay months. They are the only ones where an annual provision — insurance, tyres, property tax — is funded without cutting anything else.
The same reasoning runs the other way for your spending. Rent is monthly, groceries are weekly: twelve against fifty-two. Our entry on disposable income puts both on the right side.
Where the figures come from
The maths in this article starts from the assumptions written above. Run them again with your own figures — you should land on the same numbers.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority.