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By Pam Leibfried
When I joined Alliant’s team of volunteers teaching Operation HOPE’s financial literacy curriculum at area schools, I spent some time researching budgeting and savings techniques to find tips to share with my students. One of the savings tips I found caused a major “eureka,” lightbulb-over-the-head moment for me.
I get paid every other week, which means that I receive two paychecks per month for 10 months, but a third paycheck during two months.1 The tactic that I think is pretty brilliant is to trick yourself into thinking of those third monthly paychecks as “bonus” paychecks instead of as regular pay.
You can then use the bonus paychecks to pay down debt or boost your savings. Dedicating two whole paychecks toward specific financial goals is a great way to make huge strides in achieving them.
Let’s assume that your expenses are pretty consistent from month to month and you are making ends meet during the 10 months when you get only two paychecks. It's logical, then, that if you can successfully pay your monthly expenses with the income from two paychecks during those 10 months, you should be able to do so during the two months when you get a third paycheck. So you can dedicate those third paychecks toward other financial goals.
Be strategic in planning how to use your next "extra" paycheck to accomplish your financial goals of debt reduction or a savings boost.
And because a big part of being strategic is having a plan, we've calculated the dates when you'll receive an extra/bonus paycheck for the next two years and provided it in the table below. Add them to your calendar so they'll be baked into your budget and financial plan!
When you get paid every other week, you receive 26 paychecks each year (52 weeks divided by 2), which means you receive two paychecks most months. But if you think it through, two paychecks a month for 12 months equals only 24 paychecks, not 26. So in most years, there are two months of the year (generally, months in which you get a paycheck on the first or second day of the month), when you get three paychecks.