June 16, 2022
The concept of work is pretty simple. Employees provide a service, and employers pay them for that service. However, when it comes to when and how you are paid (for example, semi-monthly vs monthly), there are more possibilities than most people realize.
First, there’s the method of payment, which might be a check, direct deposit into your bank account or something else. Then there’s the frequency. Most people know about weekly, monthly and even bi-weekly payments – but there is another option. Let’s take a closer look at what semi-monthly pay is when you will get it, and how to calculate it.
Semi-monthly pay is a less common payment frequency that divides every year into 24 pay periods – two per month. This applies regardless of the number of days in a month, so you would usually be paid on the 15th of every month and on the last day, regardless of whether it’s February with 28 days or January with 31.
Yes. If you are paid semi-monthly, you would be paid twice in every month, regardless of how many days there are in the month, and your pay would be one twenty-fourth of your annual salary.
No. If you are paid every two weeks, you would be on a bi-weekly payment cycle, which means you would have 26 pay periods in every year, as opposed to the 24 that you have with a semi-monthly payment cycle.
Most months don’t have exactly four weeks in them, and some even have five weeks. This can also change from year to year, which is why semi-monthly payments are worked out by the date rather than a particular day in the week.
Now that you know what semi-monthly pay is, you might be wondering which is better?
If you are offered the option, should you choose semi-monthly vs bi-weekly?
The answer is that neither is better or worse, but there are some differences.
Because semi-monthly pay is calculated based on 24 pay cycles in the year, and bi-weekly is based on 26 pay cycles, you would get more per check when you are paid semi-monthly. The total amount for the year won’t change, but you would get a little more each time you are paid.
It can also be easier to plan if you are paid semi-monthly since most bills are due on the 15th or the last day of the month.
On the other hand, there’s usually less time between payments when you are paid bi-weekly, which can be helpful for your personal cash flow.
Unless you work for a very small company, it’s unlikely that you will be able to choose between semi-monthly vs bi-weekly or something else. These things are usually set up by the accounting department, and there are usually fixed processes involved in running payroll.
However, it’s always a very good idea to find out what the standard payment cycle is so that you can plan your income accordingly.
You should also know that in some cases, when you are leaving a job that has one kind of pay cycle for another that uses a different frequency, you might have to wait a little longer for your first paycheck. So it’s a good idea to ask for a payment schedule when you are hired, so you can plan and prepare accordingly.
Of course, the payment frequency should never determine whether you take a job or not, but it’s definitely a useful piece of information!