When you start a new job, the most pressing details often revolve around the money. Questions like how much you’ll earn, opportunities for bonuses, and, equally important, how frequently you’ll be paid. The answer to that last question hinges on a seemingly simple yet crucial aspect: How many pay periods are in a year?
Pay Periods In A Typical Year
There are typically 52 work weeks in a year but the amount of pay periods depends on how often the company you are working for does their payroll (ex. Weekly, bi-weekly, etc.) The pay periods in a year are as follows:
- Weekly: 52 pay periods per year (sometimes 53)
- Biweekly: 26 pay periods per year (sometimes 27)
- Monthly: 12 pay periods per year
- Semimonthly payments: 24 pay periods per year
What Is A Pay Period?
A pay period is a specified time frame the companies use to calculate their payroll and pay their employees. These pay periods are typically weekly, bi-weekly (every two weeks), semi-monthly (twice a month), and monthly.
According to the Handy Reference Guide to the Fair Labor Standards Act, “Wages required by the FLSA are due on the regular payday for the pay period covered.” Despite requiring that the companies pay regularly, it does not specify a specific time period and is up to the employers’ discretion.
However, some states do have payday requirements. For example, employers in Connecticut must pay their employees weekly; nevertheless, approval can be granted for up to a monthly pay period when granted by a labor commissioner.
Weekly Pay Periods
If you’re on a weekly pay schedule, you receive a paycheck every seven days. This results in 52 pay periods in a year, making it the option with the highest frequency.
Bi-Weekly Pay Periods
Bi-weekly pay periods occur every two weeks, resulting in 26 pay periods per year. Many individuals find this schedule aligns conveniently with monthly bills.
Semi-Monthly Pay Periods
Semi-monthly pay schedules involve two paychecks each month, typically on the 15th and the last day of the month. This totals 24 pay periods annually.
Monthly Pay Periods
For those on a monthly pay schedule, there is one paycheck per month, totaling 12 pay periods in a year. This approach can make budgeting more challenging for some.
How To Calculate The Number Of Pay Periods In A Year
You’re probably wondering why there are sometimes more pay periods. Now that we’ve covered the basics, let’s break down how you can calculate the number of pay periods in a year based on your specific pay schedule.
It is commonly known that there are 52 weeks in a year, but multiplying by 7 days, that only comes to 364 days. In reality, there are 365 days in a regular year (52.143 weeks) and 366 days in a leap year (52.286 weeks).
This means that 1-2 days occur more than the 52 weeks in a year, and if your pay period happens to conclude on one of those days, you’ll end up with an extra pay period for the year. Feeling a bit confused? Let’s break it down further:
An easy way to know if you will have an extra pay period is knowing the day the year starts. A typical year starts and ends on the same day. If the year starts on a Friday, there will be 53 Fridays in that year. If that is also when your pay period ends, that means you will have 53 weekly and 27 biweekly pay periods.
This can happen for other days as well. Also, in a leap year, there are two extra days that can give you another pay period.
Pay Period Vs Payday
As said before, the pay period is the time frame that the company uses to calculate the paycheck; however, the paycheck does not get sent out that same day. The employee’s payday takes a few days due to the time needed to calculate and verify timesheets.
For example, work performed on a pay period from August 1st to 14th could be paid on August 20th. That means that if you had a payday on January 1st, the compensation was for work performed in the previous year.
By knowing the amount of pay periods and the work hours in a year, you can approximate how much your paycheck and salary per year will be.
Making the Most of Your Paycheck
Regardless of your pay schedule, making the most of your paycheck is a universal goal. Here are some tips to maximize your earnings:
- Budget Wisely: Create a realistic budget that aligns with your pay frequency. This ensures you allocate funds for bills, savings, and discretionary spending.
- Automate Savings: Set up automatic transfers to your savings account. This “pay yourself first” approach ensures that you prioritize saving before spending.
- Take Advantage of Benefits: Explore and make the most of the benefits offered by your employer, whether it’s a retirement plan, health savings account, or employee assistance programs.
- Plan for Irregular Expenses: Anticipate irregular expenses such as annual subscriptions, car maintenance, or holiday spending. Setting aside funds for these costs prevents financial stress when they arise.
Understanding how often you get paid is crucial for managing your finances. Take a moment when you receive your paycheck to acknowledge the significance of your pay frequency. This awareness empowers you to navigate financial challenges more effectively.
Yes, the number of pay periods can change if your employer adjusts the pay frequency. Factors like leap years or changes in company policies can impact the total number of pay periods in a year.
Weekly pay provides a more frequent influx of funds, which can be advantageous for those who prefer a steady cash flow. However, it requires diligent budgeting to manage expenses between paydays.