What to do with a third paycheck month
First decide whether the third paycheck is actually extra. It is extra compared with a two-paycheck monthly budget, but overdue bills, everyday spending and irregular expenses may still need part of it. Cover those first. Then give the remainder one job before it arrives: a known future expense, emergency savings, debt, or another specific goal.
What an extra paycheck really means
A biweekly paycheck arrives every 14 days, so most years contain 26 paydays. A budget that expects two checks a month only accounts for 24. The other two appear in months that contain a third payday.
That makes the deposit extra relative to the monthly baseline, not exempt from real expenses. If groceries, gas, overdue bills or annual costs were never included in the baseline, they still need funding.
When they land
Usually two months a year, determined by your actual payday and where its 14-day cycle falls on the calendar. They move each year, so check from your first real payday rather than copying somebody else's payroll calendar.
Occasionally a calendar fits 27 biweekly paydays. In that case three months can contain a third paycheck. The dates, not a fixed rule, decide.
Give the remainder one job
Use an order, not a mood. Catch up anything already due, reserve for a known expense arriving before you can save enough for it, then choose between emergency savings, extra debt payment and a named goal based on your own priorities and obligations.
Write the amount and destination down before payday. You do not have to send the whole check to one place, but every portion should have a name; otherwise the apparent extra tends to disappear into ordinary spending.
Written by Larder, makers of an envelope budgeting app for iPhone. Last reviewed .