A pay period is the number of days for which a regular, usually non-salaried employee gets paid. Salaried employees tend to expect and receive the same pay no matter the length of the pay period, while workers paid by the hour can have variance in pay depending upon hours and days worked. Pay periods vary widely and usually are one of several common systems. You may be paid weekly, bi-weekly, monthly, yearly, or paid twice a month on specific dates, usually the 1st and 15th of each month. There are advantages and disadvantages to each different type of pay period.
The weekly pay period is preferred by some, though it can mean more expenditures for a company to pay weekly, since it means each week an employee or employers must figure out payroll, and cut and sign checks. There are also some disadvantages for the employee who gets paid weekly, if they’re not careful. The surety of money arriving every week may give some people the sense that they can spend more than would be prudent. After all, you’re only ever at most, seven days away from your next paycheck. To keep within spending limits, budgeting and allocating funds from each paycheck for necessities, like rent, food, and utility payments, is a good idea.
The bi-weekly pay system is common. Employees get paid every two weeks, usually a few days after they’ve completed the two weeks. For many employers this is the ideal way to pay employees, since it is less expensive to figure payroll every two weeks than it is to process paychecks every week.
Two to three times a year, employees who receive bi-weekly checks get the wonderful benefit of the three-paycheck month. If your budget is based on two paychecks a month, the three-paycheck month is a great time to make major purchases, get caught up or get ahead on bills, or add to your savings account. Typically you’ll still need to buy food with your third paycheck, but you’ll usually have a leftover amount that isn’t allocated to any regular payments.
The other bi-monthly plan is a pay period that ends in pay on the 1st and 15th. If you are paid by the hour, you do have to budget carefully when your employer uses this method. Some months, you’ll have larger paychecks than others, because there will be more days worked on a paycheck than usual. Other months, like the pay periods in March, can mean your paycheck is lower than usual because February is a shorter month.
Some pay period types are structured on monthly pay, and good for those who can budget their money accordingly. These may be harder for people who have difficulty budgeting, as they mean you won’t be paid again for another month. If you run out of money in the middle of the month, you’re in trouble. Living within your income is the most important aspect when you are only paid on a monthly basis.
Less common is the yearly paycheck, though a few companies employ it. Again this type of pay period means employees must live within their income and budget carefully. Some companies don’t use any of these types. Commission based workers may be paid when they make sales instead of on a specific date or during specific pay periods. Some freelance workers, especially those who work in construction fields may be paid at the end of each day.
Other freelance workers or those who run their own businesses get paid after they complete work, within a few days to a month or two. It can depend upon how quickly clients pay you, and whether you have any written agreements or verbal ones with those who employ you to pay you within a certain time period. Pay when you run your own business or freelance usually exists on a per job basis instead of being based on a specific pay period.