A semi monthly pay schedule is like a monthly pay schedule, but the payments are split up into two payments, usually at the beginning and middle of each month. The end result is often less money in one month, but it spreads out the money evenly among the four months of a quarter. This type of pay schedule has many advantages for both hourly and contract workers alike.
Ultimately, semi monthly pay is by far one of the best currently utilized payment schedules for most employees. It offers stability for employees, consistency for employers, and improves the economy, giving it many advantages that are simply not available with once-a-month payments.
Advantages of a Semi Monthly Pay Schedule for Employees
By splitting up the money into two payments per month rather than just one, hourly workers receive improved income stability and (generally speaking) a better quality of life. Many people, upon receiving large sums of money, do not allocate them effectively in a way that affords them long-term results; splitting income up, however, has the unintended side benefit of forcing people to think more intelligently with what they have, and thus people usually make better decisions.
Most semi-monthly employees use this improved stability to build savings for emergencies and other expenses that might normally be out of reach during a simple monthly pay period. The lack of worry about income leads to a more stable financial situation for these employees, fewer financial worries, and a happier career.
Another often overlooked reason behind the benefit is that a semi monthly pay schedule also means that there is less risk of overestimating finances at the end of a pay period. Receiving two smaller sums per month in lieu of one larger one helps you predict income and accommodate changes faster.
It is generally a much better problem to have too many funds on hand for unexpected expenses than not enough, and semi monthly payments allow employers to budget their remaining salary contributions significantly better than monthly payments do.
Employees with hectic schedules may want to consider this type of arrangement in order to avoid the stress of manually managing their finances. Semi monthly pay lends itself well to deposit automation, and allows you to build more stable passive income streams through avenues like index investing. It’s also preferable for the self-employed – making your invoices twice per month rather than once per month helps distribute and diversify your income, such that you don’t ‘put all of your eggs in one basket’, so to speak.
Semi monthly pay provides an added level of comfort and security for employees because they receive more consistent income, reducing stress and the overwhelming feelings associated with managing finances in general.
Advantages of a Semi Monthly Pay Schedule for Employers
Additionally, semi monthly pay is also one of the best payment schedule options for a company or small enterprise.
For smaller companies in particular (like technology startups or student-led teams), businesses usually have very little capital on-hand to afford workers, and often need to see a tangible ROI on even two weeks worth of work to be able to continue hiring and offering pay. As a result, semi monthly pay schedules mean they’re not left ‘out in the cold’ all month, so to speak – instead, they can pay a smaller sum on a two-week interval, monitor for return on investment, and then make continued hiring decisions after the fact.
Larger companies get to benefit from the increased employee quality of life and thus decreased job loss over time.
Some Disadvantages to Semi Monthly Schedules
There are, of course, some disadvantages to semi monthly pay schedules. They include the logistics involved in paying every other week, which generally require more staff or more complicated systems in order for the payments to be delivered effectively, and this can result in slightly increased bookkeeping and accounting costs at the end of the year. For the self employed, it means they have to create more pay stubs than otherwise, which can also be more work.
However, the benefits almost always outweigh the costs – which is why semi monthly pay schedules have been adopted by the vast majority of companies around the world, including our team!
In conclusion, semi monthly pay schedule is beneficial to both employees and employers. It’s beneficial for employees because they can better plan their finances and save money for the future. In addition, they’re also beneficial to employers; generally, smaller employers no longer have to worry about not receiving a tangible return on a month-long investment, and they can also automate their pay structure and improve the quality of life of their employees, increasing retention. Ultimately, semi monthly pay is one of the best payment schedules currently available offering the best of both worlds in terms of personal finances, income stability for companies and the self employed, and automatability.