When your hard-earned money gets deposited into your bank on payday, it’s natural to get excited.
It’s not just about how much you get paid, but when you get paid, that can make a difference in your budgeting. Some employers offer weekly pay. Getting paid weekly or every other week (biweekly) can make a big difference in cash flow and how you manage your funds.
Let’s dive into how weekly pay works, the differences between weekly pay and biweekly pay, and the main benefits of getting paid weekly for an employee or employer.
How does weekly pay work?
So what is weekly pay? Weekly pay is a type of payroll payment schedule where your employer pays you once a week. It’s usually set on the same day, like every Friday. If you get paid weekly, the amount you see on your paycheck is generally based on your hourly wage or salary. It’s then multiplied by the number of hours you worked during the week before.
The calculation for weekly pay works like this: Your gross pay is calculated by multiplying your hourly rate by the number of hours during the week. So, if you worked 40 hours a week, and your hourly wage is $25, then your weekly gross pay shakes out to $1,000 a week.
But gross pay doesn’t equal what you see on your paystub. Your gross pay is determined after factoring in tax withholdings like Social Security contributions and other taxes. The amount you see on your paycheck is based on what’s left after the deductions are taken out from your gross pay.
What are the benefits of weekly payroll for employees?
While biweekly pay, or getting paid every other week, is more common in the U.S., there are advantages that come with a weekly pay schedule.¹ Let’s look at some of the perks for the employee:
Frequent and consistent paychecks
A major plus of getting paid weekly is that you get consistently paid every week. With a greater payment frequency, as an employee, you won’t have to wait two weeks or longer for those hard-earned funds to hit your bank account. You’ll have an easier time setting money aside for your bills and discretionary expenses and sticking to your budget.
When money is rolling in regularly, there are more weeks to autosave for any short- or long-term savings goals. For instance, if you set aside $25 each paycheck and get paid weekly, that’s $1,300 you can save in a year. If you get paid biweekly, on the other hand, you’ll only save half that amount – $650.
Paychecks reflect the workweek
Weekly paychecks reflect the number of hours you worked the week prior – and also account for overtime. When you get paid weekly, the amount you get paid changes from week to week, which mirrors how much you worked.
With biweekly pay, your paycheck is evenly divided twice. This doesn’t reflect your work week as accurately as a weekly paycheck does. In turn, it can be hard to make sense of your deductions and adjustments and spot any errors.
Get overtime pay sooner
Another perk of a weekly paycheck is you’ll get paid overtime sooner than with other types of paycheck schedules. You won’t have to wait two weeks or the end of the month to get that money. In turn, you can access funds to cover your bills, put toward your savings or credit card debt, and make headway on other financial goals.
Discover some ways to get paid instantly.
What are the benefits of weekly payroll for employers?
Getting paid once a week comes with its own set of advantages, both as an employee and an employer. Now, we’ll walk you through the pluses of a weekly payroll if you’re an employer:
Easier to set up a schedule
Cutting paychecks for your employees on the same day simplifies your payroll and schedule. If you pay your employees on, say, every Friday, there’s no question on when to process payment for your workers.
If you process payroll biweekly or monthly, you’ll have to administer payroll on different days. For example, if your payroll dates are the 1st and 15th, in one month, the paydays might land on a Tuesday and Thursday. In the next month, the 1st and 15th might fall on a Wednesday and Friday.
Consistent submission and payout dates
A weekly schedule means your employees submit their clocked hours and get paid the same day each week. This means less confusion among your hires on when they need to send their timesheets and when HR must process payroll.
Unnecessary to prorate pay periods for new hires
Another perk of paying your employees weekly is that paychecks for new hires usually need to be prorated. In other words, if a new employee’s start date is in the middle of a pay period, you’ll need to do the math and figure out how much they’ll get paid. This means more work for you and your HR team.
If you’re operating on a weekly payroll schedule, you can sync up new hires to the existing schedule without extra hassle or calculations. That’s because new employees often start on a Monday.
This might come as no surprise, but employees prefer to get paid as soon as possible. A recent nationwide survey reveals that over 60% of working Americans prefer same-day pay.²
You’ll make your employees happier if you pay your employees weekly versus biweekly or monthly. And happier employees tend to be more invested in your company, are more productive, and stick around longer. ³
In fact, recent Gallup research finds that actively disengaged employees are 42% more likely than their engaged peers to be on the lookout for new job opportunities.⁴
Considerations for weekly pay
There are some important details to consider about this payment structure. That way, as an employee, you can make the most of getting paid once a week. And as an employer, you can see how it impacts your business.
Let’s look at what to mull over as an employee who gets weekly pay:
Note the amount and day you’re getting paid. From there, you can figure out ways to manage your money.
- Come up with a system to pay your bills on time. For instance, do you plan on setting aside the first paycheck or two toward rent and bills and the other two paychecks toward discretionary spending, such as food, gas for your car, clothes, hobbies, and entertainment?
- Another method is to set aside a certain amount for your necessities and use the rest toward your discretionary expenses.
- Give any “extra paychecks” a job. Let’s say you typically get paid four times a month. Should there be a month when you get a fifth or “bonus paycheck,” how will you use that money? For instance, maybe you want to put it toward your emergency fund, paying debt, or a big-ticket item.
Now, let’s go over what to think about if you’re an employer:
- One thing to bear in mind is the costs and time involved with a weekly pay schedule versus a biweekly pay schedule. A downside of weekly pay is that the administrative costs tend to be higher.
- However, weekly pay means your employees get paid more frequently with smaller amounts. Biweekly or monthly pay equals processing payroll less frequently but larger amounts.
- While it can cost more to process payroll on a weekly basis, employees also prefer to get paid more often. In turn, their satisfaction at the workplace could lead to higher retention rates and boost productivity, which can help your business’s success.
The sooner you get paid, the better
Knowing how weekly pay works and the perks of weekly pay as both an employee and employer can help you get your head around making the most of this less common but attractive payment schedule.
Being clued in on what is weekly pay, and understanding when your earnings drop into your account can help you gain greater clarity for your cash flow and devise a plan for those funds.
Want to understand your paycheck better? Learn more about gross and net pay.