BREAKING NEWS: The 3 Paycheck Month is a Myth!

If you’re paid bi-weekly, then you’re probably familiar with the 3 paycheck months. Twice per year you should receive an “extra paycheck” (which is great when trying to make some progress on your debt).

How does this work? It’s all in how your salary is divided.

If you received 2 checks per month, you’d get 24 checks total in a year (12 months multiplied by 2). When paid every other week, you get 26 paychecks in the year (52 weeks divided by 2). 

This means your checks will be a little smaller, but you’ll receive 2 more of them every year. Thus, you’ll have 2 months per year where you’ll receive 3 paychecks. 

Here’s the problem… the 3 paycheck month is a myth.

Why I Hate The Bi-Weekly Pay Structure

Look, I get it. Extra paychecks sound amazing. But I personally can’t stand the bi-weekly paycheck system.

Simply put, it’s a pain in the butt when it comes to cash flow.

Here’s why:

Let’s say you’re paid every other Friday. That means every 14 days you receive a paycheck. Unfortunately we know that there are more than 28 days in most months. 

That means you’re not paid on the same date of every month. You might get a paycheck  on the 1st one month, then the 5th, then the 10th, etc. 

This can be a cashflow nightmare, especially if you have bills due on the 1st but your first check doesn’t come until the 10th. 

Let’s look at it this way. Coming up soon, many of you will get paid 3 times (the 2nd, the 16th, and the 30th). Our brain immediately thinks “Jackpot! Extra paycheck!”

Not quite…

If we use the check on the 30th as our extra check, then we won’t receive a check in the following month until the 13th (which basically ruins that month).

So what should we do?

Solution #1

Choose when you get your extra paycheck.

Go through your calendar, map out your paychecks for the year. On each payday, write “[month] check 1” and “[month] check 2.”

Example:

April 1: “April check 1”

April 15: “April check 2”

April 29: “May check 1”

May 13: “May check 2”

May 27: “June check 1”

Even though your check may be deposited on May 27th, you know the cash needs to sit for a few days and be saved for June.

The beauty of this system is you can CHOOSE when you think it’s most convenient to take that extra paycheck. This is a quick exercise that lets you plan when you’ll get that excess cash flow without throwing everything off.

Solution #2

Another option (and my favorite) is to open another checking account. 

This account is your “direct deposit account.” It’s sole purpose is to hold your paycheck for you.

With this method, you would change your direct deposit at work to put your paychecks into this new account. Then, on the 1st and 15th of the month, transfer your check from the direct deposit account into your regular checking account.

This is you choosing your paydays. It helps with cashflow as you will always have money coming into your account on the 1st and 15th.

The best part? Twice per year when you go to transfer money from the direct deposit account to your main checking account, you’ll notice a surplus. That’s because you received your “extra paycheck.” You can take that excess cash and toss it on your date, put it in savings, or buy a new TV.

Paid bi-weekly and ready to stop the headache? I can help. Click here to schedule a free coaching session.

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