The Joy’s of Three Paycheck Months
July is around the corner, and for Ben and I, this means a three paycheck month! Many employers, like ours, pay their employees using a 26 pay period cycle versus the traditional 24. Of course, this means each check is a little less, but twice a year we get the third magical paycheck. These extra paychecks feel like bonuses and are very tempting to spend foolishly. How should you approach these months?
Cons with 26 Pay Periods
It’s too easy to blow these extra checks on “stuff,” because we don’t notice the extra money is missing from each regular check. Just like having your savings taken out of your checks each month, if it’s always gone, you don’t miss it. In a way, it’s kind of like an interest free loan to your employer, because it’s money that could be earning interest for us – similar to tax refunds. Although the extra money accumulated from adding just two paychecks isn’t a ton of money, its still money.
Pros with 26 Pay Periods
It’s a mandatory savings vehicle; after all, we have no choice! It’s like getting two stimulus checks a year (only it’s taxed). Used wisely, these extra checks are great for paying down unavoidable debt. Maybe your hot water heater went out and you were forced to swipe it on a credit card. Well, you can now pay it off. Or, maybe you have a couple thousand left on a car loan, not any more! Another great way these extra checks can be utilized is funding an IRA to the fullest amount. In my opinion, if your savings is low, these should absolutely be saved for the just in case moments.
Personally, I like the 26 pay period system. My wife and I typically try to save about 60-70% and spend the rest on items we have been wanting for awhile, that just didn’t quite fit into our budget. You have to allow yourself to splurge every once in a while, other wise, maintaining a fiscally responsible budget gets harder and harder. $
Related articles you might be interested in:
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader or email.
Comments
No comments yet.
Leave a comment