What to do with a third paycheck
If your bills are already funded per paycheck, the third one in a three-payday month has nothing claiming it. That happens twice a year on a biweekly cycle. The useful moves are the ones a normal paycheck can't cover: a sinking fund for a known expense, a chunk off a debt, or the annual bill that always arrives badly.
Why it only works if you budget per paycheck
If you budget monthly, the third paycheck isn't extra — it's what makes that month's numbers work, because your monthly plan quietly assumed 24 paychecks a year.
Divide the bills by 26 instead and the third paycheck genuinely has no job. That's the only version where this is free money rather than a rounding error.
When they land
Two months a year, determined by which day of the week you're paid and where the year starts. They aren't evenly spaced and they move each year, which is why the calendar is worth checking in January rather than being surprised.
What people actually do with it
The three that come up most: fund the annual bill that always hurts, put it against the highest-interest debt, or top up an emergency fund to a round number.
The one that doesn't work is leaving it unassigned. An unassigned paycheck gets spent like any other.
Written by Larder, makers of an envelope budgeting app for iPhone. Last reviewed .