How would you like to save two full paychecks over the next year?

In this article, I’ll explain three paycheck months and a simple budgeting tip that I’ve used for more than a decade to save thousands every year.

Paid Every Other Week? Save More With 3 Paycheck Months

Here’s how it works: If you’re a salaried employee, you likely get paid biweekly (every other week) or twice per month.

What’s the difference? When you’re paid biweekly, you end up with 26 paychecks in a year, not 24 like those paid twice a month.

  • BIWEEKLY: 52 weeks / 2 = 26 paychecks
  • TWO TIMES A MONTH: 12 months x 2 = 24 paychecks

Employees paid biweekly will get two paychecks per month for 10 months out of the year, but there are two months when they’ll receive three paychecks.

Now here’s the budgeting tip…

When I create my monthly budget, I set my projected monthly income based on receiving two paychecks and not a penny more.

For months with three pay periods instead of two, I treat those checks like bonus money! That works because my budget is based on only two checks per month.

What to Do With Your ‘Extra’ Checks

Here’s an example: When I was paying off my mortgage in two years, I would use those third paychecks to apply toward the principal and eliminate the debt faster.

But when I was just starting out after college, I used the third paychecks to pay off credit cards.

Once I was no longer living paycheck to paycheck, those third paychecks helped me build an emergency fund and start saving for a down payment on a new home.

More recently, I’ve used one of the paychecks to pay my auto insurance premium and another to spend on Christmas presents.

3 Paycheck Months in 2020

To determine your three paycheck months, you need to take a closer look at your pay calendar. It depends on when you’re paid by your employer.

If you’re paid every other Friday, I determined the months with three paychecks for 2020:

First Paycheck: Friday, January 3

3 Paycheck Months = January and July

First Paycheck: Friday, January 10

3 Paycheck Months = May and October

2020 calendar highlighted with 3 paycheck months for those paid on Fridays. If the first check is January 3, January and July are the 3 paycheck months. If the first check is January 10, May and October are the 3 paycheck months.

UPDATE: If your three paycheck months for 2020 are January and July, you may receive a third paycheck in December as well due to what’s called “payroll leap year.” New Year’s Day (January 1, 2021) is on a Friday. Since that’s a holiday and banks are closed, many employers will process that paycheck the day before on December 31, 2020.

Not paid on Fridays? Pull out a calendar for the year and mark all of your paydays to easily identify your three paycheck months.

If you’re paid weekly, here are the months with five paychecks in 2020.

And if you want to plan ahead for the three paycheck months in 2021, here’s how to find out.

Final Thought

Whether you want to pay off debt, save for a major expense or go on a vacation, there are many possibilities for your three paycheck months.

If you decide to try out this budgeting tip, make a plan ahead of time for your third paychecks so that you don’t spend the money on things that you don’t need or even want.

What are you planning to do with your three paycheck months? Leave a comment below!

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