No easy way around extra paychecks

For those of us that get paid every two weeks, we face a battle of epic proportions. Managing a budget is no easy task, especially when all months AREN’T created equal. Ten months a year we might bring home $4,000, but two months of the year we bring home $6,000. Why must such cruel things exist!?

Although an extra paycheck is definitely a good problem to have, there is no denying it adds a little hiccup to the budgeting process. Us “three paycheckers” really only have two options…

  1. We can mentally break up the two extra paychecks. Say for example you take home $2K every two weeks. Instead of budgeting your expenses around $4,000/month, you can pretend you make $4,333/month (since that is your average monthly income over the course of a year). In my opinion this method sucks. It takes a lot of work, discipline, and patience. It also causes you to spend money you don’t necessarily have yet. My first third paycheck month doesn’t come until March each year, so by this rule, I’d be spending money in January and February that I have not yet received. It would be like spending your tax return before you actually got it. Sure, you know it’s coming, but it’s best you wait for it to get deposited in to your bank account.
  2. I like to pretend the extra paycheck is a bonus. If you take home $2,000 every two weeks, I recommend you budget your expenses around a $4k per month income. When March and August roll around, you suddenly get an extra $2,000. Two thousand dollars that does not have a budgeted purpose. You can spend it on a vacation, a unicorn, or even be responsible and open a Roth IRA. Booyah for unicorns and responsibility!

If you haven’t noticed…it’s almos August, which means I’ll be getting an extra paycheck next month. Perhaps I will buy a few thousand McChickens from McDonalds, maybe I’ll give this extra paycheck to one of my lucky readers, but most likely I will be boring and throw it in the good ol’ savings account. Totally un-sexy… I know.

I know I’m not the only person that gets paid every two weeks. How do you manage? What works best for you!?

23 thoughts on “No easy way around extra paychecks

  1. The one next month will probably go straight into savings, but the one earlier this year came just in time to pay for new contacts and glasses and few other items that came up in the beginning of the year. So I guess it sort of went into savings because I didn’t have to pull from savings to pay for those things. 🙂

  2. I like to treat it as a bonus. Next month’s extra check will likely be an extra buffer for my checking account. I leave for vacation on Bonus Pay Day and it will be nice to have a little breathing room should something happen!

  3. Usually I just spend it on nonsense. This year I got my first 3 pay check in January and did something a little different. I divided it by the 6 months (till the next 3 pay check month) and used that number in my monthly budget. It has helped when we lost a day or two of pay since the paycheck may have been smaller but the end total of income for the month stood the same. If we had no lost income that month we left it as a buffer in the checking account incase something comes up down the line (i.e. like a car repair happening today).

  4. Right now my husband is a post-doc (temporarily) and I’m a freelance writer. We create an entire new budget every month to account for our crazy fluctuating income. At the end of the month, we’ll add up how much we each earned in net income, and do a zero-based budget a la Dave Ramsey, and that becomes the next month’s budget (starting on the first of the month). So far it works for us.

  5. I split my bills into two halves of the month and budget based off two paychecks for bill purposes.. living expenses are on the biweekly pay cycle, if that makes sense.. when we have a month that has a third paycheck , I pull out standard recurring costs for the next two weeks, like gas, daycare, tolls, groceries, weekly transfers to savings accounts.

    Whatever is left I plot between efund, vacation funds, and various savings “buckets”- (cap one 360, formerly ing, lets you have as many savings accts as you want, so I have them for vacation funds, car maintenance, hoa dues, house upgrades etc).

  6. I contribute to a family joint account every paycheck, about 50% of it.

    The summer 3rd pay check left over goes into car insurance (I pay lump sum annually, it’s cheaper) and what ever is left after that into savings.

    The spring 3rd paycheck was used for property tax (lump sum, also cheaper), but that’s not needed anymore (monthly payment option has no penalty anymore), so I put all of it into savings.

    Generally I like to take any extra unexpected money and put it into retirement savings.

  7. It equally sucks only getting paid once a month when for the last 12 years you’ve been paid every two weeks. Budgeting is completely different when you only get paid once a month. It took me a few months to fall into the groove, but now that I’m here its fantastic.

  8. Well, back when I was working and getting paid every 2 weeks, that money almost always went to pay bills. Something would usually pop up that needed to be covered immediately, so those pesky extra paychecks were never an issue. Sure wish I still had to deal with them!

  9. My husband and I each get paid biweekly, but alternating weeks. Which means that every Friday is a paycheck, and every THREE months is a bonus paycheck month! Its super sweet! But we budget monthly for two paychecks, and then every three months we throw the extra paycheck on our current goal. Right now, that means paying off the mortgage. Next year, it will become Vacation Fund money! Woo hoo!

  10. Mine goes directly into my vacation account 🙂 We take one big vacation each year and I love not having to sweat over budgeting extra to cover the costs.

  11. This year, as luck would have it, I get 3 months with 3 paycheques! Jan/July/Dec. Technically, we would get paid Jan 1st 2015 but since its a holiday we’re getting paid on Dec31st. I also treat it as a bonus and used to put it on debt. Now that I’m debt free, most of it goes directly into savings 🙂

  12. Extra Paycheck = Funding Baby Ninja’s College fund?

    Let’s say Baby Ninja starts school at age 18; 36 “bonus” checks at $2,000 each would be $72,000 before any interest and you get a nice chunk of cash there for an education.

  13. You can hand those extra checks over to me, if it’s burning a hole in your pocket and you don’t know what to do with them…

  14. I used to treat it as a bonus. But having just retired, I can now control the timing of the withdrawals I take from my IRA, so for me the point is now moot.

  15. I get paid every two weeks and that’s how I budget – two weeks at a time. It just makes sense for us as we pay our mortgage weekly. It means we really don’t get an “extra” cheque but I also don’t have to worry about making three mortgage payments out of one cheque, like I used to when I got paid on the 1st and 15th.

  16. A while ago you wrote about one of your ‘kids’ that had lost both his parents… Sounds like this is just in time for the start of the school year. Why not take him for a shopping trip for back to school stuff (or spending some time with him, or finding a way to commit those funds to him and help him out.)

  17. Love the “extra” paychecks! It’s always used for something a little different depending on my circumstances at the time. Next month about half will go to beef up the savings and half will be used for my bathroom makeover.

  18. Certainly a good problem to have. I make it easy and apply that extra paycheck towards my student loans. Once my student loans are gone (God I can’t wait for that day), I’ll have to figure out what to do.

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