Three Tips For A Three Paycheque Month

2019-04-23   minute read

Lifestyle Debt

People with bi-weekly income have the unique advantage of receiving 26 paycheques per year, compared to 24 paycheques for people who receive semi-monthly remuneration. That means there are two months in which bi-weekly earners will receive three paycheques – and that can feel like a small jackpot.

Assuming you’re a bi-weekly earner who has been successfully managing your monthly expenses throughout the year with the income from two paycheques, you should have no problem paying your bills with the first two paycheques in a three-paycheque month. That means, if you play your cards right, you can target that third paycheque to other financial goals.

Two people crunching numbers on a laptop with a notebook on the table

If you’re looking for ideas for what to do with that windfall, we’ve included three great ideas below.

Pay Down Debt

If you’re carrying balances on your credit cards, lines of credit, personal loans, student loans, car loans or payday loans, this is an easy decision. Using either the debt avalanche or the debt snowball method, dedicate that extra paycheque to either your debt with the highest interest debt or the lowest balance.

Doing this is beneficial for two reasons. One, it will help you become debt free much faster, freeing up future third paycheques for other savings goals. Two, it will reduce your interest costs over the long run and help you stretch the budget for your regular two-paycheque months even further.

Build Your Emergency Fund

Most experts recommend people set aside anywhere from three to nine months’ living expenses for unplanned and unexpected costs – such as job loss, home or automotive repairs or a sudden illness in your family. Unfortunately, MNP’s quarterly Consumer Debt Index consistently reveals most Canadians are not at all confident they could weather such a financial storm.

While it may not seem exciting to have a large sum of money sitting in your bank account that you’ll ideally never use, you’ll be glad you did if – and most likely when – you encounter a worst-case scenario.

Save For Important Goals

Consider your long-term objectives over the next two, three and five years. Maybe you want to buy a house or a new car. If that’s the case, the larger your down payment is, the lower your monthly payments will be – and you’ll probably get a better interest rate as well.

But even if neither of those goals are on your horizon, there’s likely still something you could be saving for: An all expenses paid debt-free vacation? Sending your children to university without burdening them with student debt? Home improvements? A new entertainment system for your house? Let your imagination run wild and let that savings account grow!

You Worked Hard for that Money

Many people fall into the trap of treating three paycheque months like free money and spend the additional income on frivolous (and often forgettable) purchases. Remember, you worked hard to earn that money, just like every other paycheque throughout the year. You just happened to benefit from a fortunate idiosyncrasy in the structure of the months and the payment schedule your employer chose to follow.

Certainly, allow yourself to indulge a little bit. Set aside between 10 and 15 percent of that third paycheque to have a little guilt-free fun. But don’t lose sight of your financial goals and the opportunities that beautiful little peculiarity in the calendar provides for you.

Life-Changing Debt Solutions

If you receive bi-weekly income and struggle to make ends meet, no matter how many paycheques you earn a month, MNP can help. During a Free Confidential Consultation, a Licensed Insolvency Trustee will review your financial situation, inquire about your goals and identify opportunities for you to achieve the financial fresh start you need and deserve.

You may qualify for a Life-Changing Debt Solution such as a Bankruptcy or Consumer Proposal. Or you may benefit from one of several other options – such as a consolidation loan or budgeting advice. Your Licensed Insolvency Trustee will provide you with all the information you need to make the best choice so you can finally find the path to permanent debt freedom.

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