How to Budget Paychecks

Knowing how to budget your paycheck will help you stay financially fit.

Knowing how to budget your paycheck will help you stay financially fit.

Sticking to a household budget is an essential function of being financially stable. The security of a budget allows you to know how your income is spent on both the necessary and extra items in life. You can budget your paychecks to allow for spending in areas such as routine expenses, savings and even luxuries.

Items you will need

  • Pay stubs
  • Tax return for prior year
  • Copies of all monthly bills for past six months
  • Checkbook

Determine your income. Add together your paychecks by using pay stubs so that you are only using the net, take-home figure for your calculations. Make sure to take into account the frequency of your pay. Calculate your annual take-home income by multiplying your paycheck take-home figure by the number of times in a calender year you are paid.

Make a list of all monthly and routine expenses. Include payments made for rent or mortgage, utilities, vehicles, insurance premiums, credit cards, loans, routine medications and other expenses you incur regularly. For expenses that change every month -- such as utilities -- add together 12 months of payments and divide by 12 to determine the average figure. Add together all figures to determine monthly output.

Divide your monthly expenses by the number of paychecks you receive per month. Earmark that figure for each paycheck. This will give you a baseline figure to use in your budget. For example, if you bring home $2,000 per month between two paychecks and your monthly expenses total $1,000, you will need to reserve $500 per paycheck to pay for your expenses.

Make adjustments to your budget as necessary. Understand the due dates for all bills and organize finances accordingly. Make sure you hold back enough money from every paycheck to afford all bills for the month.


  • Understand that based on the due dates of certain bills, you may need to adjust your budget. For example, if the majority of your bills are due on the first of the month and you receive two paychecks per month, it is wise to set aside 50 percent of each paycheck to go toward those specific bills.
  • Do not allow expenses to exceed income. Adjust your lifestyle as necessary.
  • Review credit card statements, receipts and checking account information to determine areas of spending that can be cut such as dry cleaning, personal memberships and dues, and other items that can add up to costly monthly spending.

About the Author

Jennifer Hench has been writing since 1990 on topics ranging from finance to technology. Her articles have appeared in "Network World" magazine, "Electrical Contractor" magazine as well as in other print and online media. Hench holds a Bachelor of Science in accounting and another in information systems from Lebanon Valley College and Lock Haven University.

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