I get a 3rd paycheck this month!
- Thread starter Danoz
- Start date
I do the same thing, except I put it towards bad debts instead of savings due to the interest rates of each.
I'm also paid bi-weekly. I put a portion of the "extra" check into a fund to pay those bills that come less than monthly (eg. quarterly or even annually), and then when those bills come around, I don't have to pay them out of my regular two checks a month.
My wife is paid on the 15th and 30/31st. We tend to structure our spending around weekends, and so usually each check covers 2 weekends, but sometimes a paycheck has to cover 3 weekends instead, which kind of sucks.
I still don't get it but my salary is monthly, so I might be missing something.
This isn't really extra money, is it? Talk me through it... you still have the same annual outgoings, and the same annual income, right? One month, you might receive more paychecks, but if you spend more than usual, and are living paycheck to paycheck, you're going to be WAY short of funds the following month, aren't you? There's no extra money involved in this, is there? If there is, I want to be paid fortnightly too!
This isn't really extra money, is it? Talk me through it... you still have the same annual outgoings, and the same annual income, right? One month, you might receive more paychecks, but if you spend more than usual, and are living paycheck to paycheck, you're going to be WAY short of funds the following month, aren't you? There's no extra money involved in this, is there? If there is, I want to be paid fortnightly too!
There's not.
If you make 100K and get paid monthly (12X) then each check is 8,333 gross.
Two times a month (24x) - each check is 4,167 gross.
Every two weeks (26X) - each check is 3,846 gross.
At the end of the year, you are still making 100K - in whatever currency you are earning
If you make 100K and get paid monthly (12X) then each check is 8,333 gross.
Two times a month (24x) - each check is 4,167 gross.
Every two weeks (26X) - each check is 3,846 gross.
At the end of the year, you are still making 100K - in whatever currency you are earning
From the perspective of an annual salary, no, it isn't. It is still 26 checks that add up to that salary.
However, people get used to allocating a monthly budget - payin' da bills - based on how much is coming in in a month. 10 months of the year, that is 2 times a paycheck, so you figure, I can pay rent, water, electric, etc, out of 2 times a paycheck, and I'm good. So in the two months when THREE paychecks come, and you've already covered your monthlies, it feels like bonus money. You still have to pay for food for the two weeks, but that's it, 'cause you already covered everything else with the other two.
You notice this a whole lot more if you are forced to live from paycheck to paycheck. Believe me.
(The same concept will cause you to get screwed on annual charges, like auto property taxes, because they aren't budgeted monthly, and you may forget to set some of this glorious "extra" money aside for it, get taken by surprise, and have to play catch up. At least, until you get used to it.)
It's more of a psychological thing, I guess. You do end up with the same amount of money at the end of the year, but I structure my expenses by the month: it costs $X to pay all the monthly bills (mortgage, utilities, tuition, car insurance, etc.). I usually get 2 paychecks every month, totalling $Y. So long as Y >= X, I'm happy. In other words, the two paychecks I usually get every other week within a single month pay for that month's known, regular expenses. In those months where I get 3 paychecks, the "extra" funds aren't allotted to any regular monthly expenses, so they are unrestricted funds. I set aside part of that money to pay the bills that come quarterly or annually, and then I don't have to make my regular 2-paycheck month income cover them too.
Someone noted that this moves your paycheck around in the month, and that the first might not come until the middle of the month. I've solved that by offsetting my paychecks relative to my expenses: the first paycheck of the month covers the bills that come due in the second half of that month, and the second paycheck of the month covers the bills for the first half of the following month. So the first paycheck could come as late as the 15th of the month or the second as late as the 31st, and they still come in time to cover their respective halves of the month. In 3-paycheck months, the 3rd check is the one in the middle of the month.
I used to get paid monthly, and I hated that.
Someone noted that this moves your paycheck around in the month, and that the first might not come until the middle of the month. I've solved that by offsetting my paychecks relative to my expenses: the first paycheck of the month covers the bills that come due in the second half of that month, and the second paycheck of the month covers the bills for the first half of the following month. So the first paycheck could come as late as the 15th of the month or the second as late as the 31st, and they still come in time to cover their respective halves of the month. In 3-paycheck months, the 3rd check is the one in the middle of the month.
I used to get paid monthly, and I hated that.
Say you get a $1000 paycheck twice a month ($2000 total for one month). Your monthly bills (power, rent, TV, whatever) are roughly $1000 a month. That leaves $1000 for bills and $1000 extra "profit" every month.I still don't get it but my salary is monthly, so I might be missing something.
This isn't really extra money, is it? Talk me through it... you still have the same annual outgoings, and the same annual income, right? One month, you might receive more paychecks, but if you spend more than usual, and are living paycheck to paycheck, you're going to be WAY short of funds the following month, aren't you? There's no extra money involved in this, is there? If there is, I want to be paid fortnightly too!
Now, let's say the next month you get an extra $1000 paycheck because there are 3 paydays in that month. Your monthly expenses are still the same as the month before, but you collected 3 checks instead of 2. So for that particular month, it would appear as an "extra" $1000 that does not need to go toward your regular bills.
I get it now. Thanks guys.
One thing though:
This sounds a really dangerous way of thinking, ESPECIALLY if you're living paycheck to paycheck. Because if you really do feel like this is extra money, because your bank balance happens to have a higher number, you're likely to spend some of it in a way you normally wouldn't, and then NEXT month, you'll run really short of funds halfway because the budgeting is all screwed up because you've overspent. Anyway, I'm sure you guys are aware of this, so I'll just end by saying that I don't think I'll be asking HR to alter my payroll details any time soon!
One thing though:
This sounds a really dangerous way of thinking, ESPECIALLY if you're living paycheck to paycheck. Because if you really do feel like this is extra money, because your bank balance happens to have a higher number, you're likely to spend some of it in a way you normally wouldn't, and then NEXT month, you'll run really short of funds halfway because the budgeting is all screwed up because you've overspent. Anyway, I'm sure you guys are aware of this, so I'll just end by saying that I don't think I'll be asking HR to alter my payroll details any time soon!
I don't know why you would overspend. You'd still be getting your regular paychecks the following month to cover your bills.
I don't really have this problem, as most of my funds are derived from cash tips. My paychecks, if you can call them that, are usually no more than $200 every two weeks. I don't even factor them into my finances.
I don't really have this problem, as most of my funds are derived from cash tips. My paychecks, if you can call them that, are usually no more than $200 every two weeks. I don't even factor them into my finances.
I am paid every two weeks and I sometimes get three checks in one month as well. The next time for me is May 09 on the 1st, 15th and the 29th.
It really doesn't add up to anymore money though, that is an illusion.
It really doesn't add up to anymore money though, that is an illusion.
It might work if you _can_ budget on a monthly basis.
However, I'm in more of a situation where I need to pay close attention to when bills are due (hugs Quicken). If I treated my "extra" paycheck in the manner suggested, I'd be fubar'ed for rent and other early-month expenses. "Oh, I was going to pay that when my first check of the month comes in," doesn't tend to carry a lot of weight with people.
However, I'm in more of a situation where I need to pay close attention to when bills are due (hugs Quicken). If I treated my "extra" paycheck in the manner suggested, I'd be fubar'ed for rent and other early-month expenses. "Oh, I was going to pay that when my first check of the month comes in," doesn't tend to carry a lot of weight with people.
As a guy who made payroll every other week for 21 years, I know this phenomenom all too well.
This happens twice a year, but only if you are paid every other Xxxday (my payroll was every other Friday). You can figure that out easily. If you get paid every other week, that means you get 26 checks a year (52÷2). If you only received two checks a month, that would be 24 checks (12x2). The extra two checks are the bonus checks.
I hated this. Two months out of the year, I had to come up with enough cash to make a third payroll, plus pay the payroll taxes. Of course, I also got a bonus paycheck, but it didn't take the sting out of these two months. The bonus payroll really made cash flow tough.
This happens twice a year, but only if you are paid every other Xxxday (my payroll was every other Friday). You can figure that out easily. If you get paid every other week, that means you get 26 checks a year (52÷2). If you only received two checks a month, that would be 24 checks (12x2). The extra two checks are the bonus checks.
I hated this. Two months out of the year, I had to come up with enough cash to make a third payroll, plus pay the payroll taxes. Of course, I also got a bonus paycheck, but it didn't take the sting out of these two months. The bonus payroll really made cash flow tough.
A business manager has to take a different view of budgeting than those getting paid. There must be a focus on annual revenues and expenses to ensure proper cash flow. Like Holdfast and others have said, no one is actually getting paid more money than they are entitled to receive in the "bonus" months.
Similar threads
