How to Hack Your Budget with a 3 Paycheck Month!

Getting paid biweekly can give you one of the biggest life hacks EVER! I’ve had several jobs over my life, they have all paid me differently. My current job I get paid on the 1^st and the 15^th of every month but my husband gets paid biweekly. It wasn’t until I added his income into our monthly budget that I realized that we would have a HUGE income month for March! If you get paid twice a month like I do then you will receive 24 paychecks in the year (12 months x 2 = 24 checks) but if you get paid every two weeks then you will receive a total of 26 paychecks in the year (52 weeks / 2 = 26 checks)! 

Twice a month = 12 months x 2 = 24 checks

Every other week = 52 weeks / 2 = 26 checks

This will result in March and August being 3 paycheck months! Wooohoooo!! Extra money! Yes, it will be extra money but it is very important that you use it to your advantage!

Don’t waste it on shopping and frivolous purchases

My old pre-budgeting self would use this extra money to go shopping. I would justify those purchases by buying items that were on sale … but it’s not really a good deal if you didn’t need them in the first place.

Have an action for your money.

If you aren’t intentional with your money you will end up spending it on just random purchases and before you know it all that extra money will be gone… or worse, you end up spending more than you had and go into the red. Instead put your money to good use and come up with an action plan for your money. Set some specific goals for your money. Here are some suggestions of what you could do with your extra paycheck.

Pay off a debt

Paying off my student loans was one of the best feelings of my life (right behind saying “Yes” to Jayme’s proposal and “I Do”. You can gain some major momentum by putting an entire paycheck towards debt! I know several people that it would knock out 3-4 credit cards in one shot!

Pay an insurance policy

Check with your auto insurance carrier and see if they give a discount if you pay for your policy in full. I pay for my insurance every 6 months, doing this I save about $300 for each policy totaling in a $600 savings per year!! I’ll admit, the first time that I switched from paying every month to every 6 months and having to come up with that amount all at once was hard but if you use your extra paycheck you can tackle it all at once and not have to worry.

Once you pay your policy in full start a car insurance sinking fund, continue to put your monthly payment into a savings account so that at the end of the 6 month policy you can pay the next premium without batting an eye. I’ll admit the first time that renewal came and I was able to just write a check to pay a $1,200 policy in full I started to tear up because it was such a huge accomplishment for me.

Add it to the new car fund

Are you currently saving for a new car? I recently purchased my dream car in cash and putting an entire paycheck towards that sinking fund is a great way to hit that goal very fast.

Contribute to a retirement account

In 2019 the amount to add to your Roth IRA was increased from $5,500 per person to $6,000 per person! The extra $500 a year adds up quick with compound interest! If you haven’t already started an IRA now is a great time to start one. Many people think that you can only open one if you put in the full $6,000 amount but that is not true, you can start one and input just a couple hundred dollars at a time. An extra paycheck is a great way to start that fund off!

Grow your emergency fund

If you don’t already have a starter emergency fund NOW is the time to do it!! Having an emergency fund gives you so much peace of mind. If your starter emergency fund is currently sitting at $1,000 try to work up to a full month’s worth of expenses while still paying off debt. If you are already debt free (except your mortgage) start building up to a fully funded 6 month emergency fund.

Start a vacation fund

I am all about having a vacation fund going at all times. Travel is very important to my husband and me (especially before we have kids), we typically go on bigger vacations and cruises but that doesn’t have to be the case for you. It could be a small $1,000 vacation one or two states away that you can drive to.

I also like to keep money in our vacation fund in case we have to make a last minute trip to visit out of state family. Having a family member suddenly fall ill has happened to me several times. My family lives across the country from me (FL > MA) and going into debt to say goodbye would add so much stress to an already stressful situation. We always keep enough in our vacation fund for plane tickets for Jayme and I to fly to see them if we need to.

Save up for a home renovation

Has there been a small home renovation or upgrade that you have been wanting to do since you moved into your house? Those projects find their way to the back burner year after year. If it is something that you can cash flow in just one paycheck then go for it, or you can save March’s 3^rd paycheck and then when it comes around again in August, put the checks together and go for it!

Unexpected expenses coming up?

Wedding season is just around the corner. Do you have a family wedding that you need to save for this summer? Take care of it now by starting a vacation sinking fund.

Your Turn!

What are some ways you plan on using your extra paycheck?