5 Money Saving Tips for the 3 Paycheck Months This Year

Payday is easily one of everyone’s favorite days. For many employees, payday only comes every other week, or, bi-weekly.

Being paid bi-weekly has both ups and downs. While you do have to wait longer for your next paycheck, bi-weekly workers also have two 3-paycheck months a year. And for many of us, it’s like winning a small lottery jackpot.

What is a 3-Paycheck Month?

Every year there are 2 months that have 5 weeks. For those who get paid every other week, this could lead to a total of 3 paychecks over the period of one month rather than the usual two.

How? Every year has 52 weeks. If you are paid bi-weekly you’ll have 26 pay periods a year.

However, there are usually only 4 full weeks a month. If you multiply those 4 weeks by the number of months in a year, you fall short two paychecks:

To make up for the months with more than 4 weeks, you can get a couple of extra paychecks in there. With that math, this means that 2 months a year you can expect 3 paychecks.

What Months Have Extra Pay Periods?

If you’re paid bi-weekly, news about receiving an extra paycheck twice a year can be exciting. But what months have 5 weeks?

These months may vary based on the day that you get paid. An employee who is paid on a Friday will not have the same 3 paycheck months as a person who gets paid on a Wednesday. Be sure to check out your company’s bi-weekly pay period calendar to which month you can expect an extra paycheck.

Best Ways to Use Your Extra Paycheck

An extra paycheck can be tempting to squander away. However, you should consider using that money to help bring your personal finances into balance. Here are 5 suggestions for getting the most out of those 3 paycheck months:

1. Build Your Emergency Savings Fund

Experts advise consumers to have at least 9 months’ worth of income saved in case of an emergency or a period of unemployment. This fund can cover any surprising financial situations, including:

  • Medical bills
  • Accidents
  • Natural disasters
  • Job loss
  • Life events

Saving 9 months of income can be tricky when your plate is already filled with bills. Because your budget is already accustomed to 2-paycheck months, the extra paycheck can help ease the burden of building savings. If you don’t already have an emergency savings fund put aside, putting your extra paycheck towards starting one is your best option.

2. Pay Down Debt

If you’re working to pay down debt, using an extra paycheck is a no-brainer. Though your annual salary remains the same, your take-home income changes with the third paycheck. Those extra funds will help you get out of debt faster and save you money in interest and fees down the road.

3. Make an Extra House or Car Payment

Generally, it’s a good idea to make an extra payment every year if you can afford it. An extra mortgage or auto loan payment per year can shave 2-3 years off of a typical loan, saving you thousands of dollars in interest expenses and potential fees. Plus, if you can pay off your car, it will be worth more when you find the right time to sell or trade it in. 

4. Save for Financial Goals

Extra paychecks aren’t solely reserved for responsibilities. There are a variety of financial goals you may set for yourself that are also worthy of your extra cash, including:

  • Education
  • Down payments for cars and houses
  • Vacations
  • Expensive gifts for yourself or others

Whether your goals are smaller responsibilities or oriented around things you want, they are great ways to spend any extra cash you may not already be included in your budget.

5. Invest for the Future

If you’ve got your emergency savings fund in place and feel okay about the status of your debts, consider investing extra income towards your future. Put that extra money towards:

  •  Roth IRA
  •  Mutual fund
  •  401(k) retirement account

These account types are designed to help you financially later in life. Not using that extra cash today could cover costs you may face in retirement.

Use Your Money Wisely

Whether you pay down debt or save it for the future, extra monthly paychecks can have a positive impact on your financial situation. 

To learn more about creating a budget that works for you, call us today for free coaching on how to take control of your financial freedom.

Speak to our certified Financial Coaches to review all of your options and discuss best strategies for getting out of debt.Speak to our certified Financial Coaches to review all of your options and discuss best strategies for getting out of debt.

About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over two decades of experience in the industry.