Most employees get paid twice a month or biweekly. If you get paid biweekly, there are two months in 2022 in which you will get three paychecks.
If you get paid twice a month, you will get 24 paychecks a year – usually on the 1st and 15th of the month. But if you get paid biweekly, you will get 26 paychecks a year. That’s two extra paychecks a year.
Don’t use the extra paychecks as an excuse to waste the money on things you don’t need. The key is to plan your monthly budget based on two paychecks rather than three. You can use the two extra paychecks to reduce your debt, save for your vacation, saving for an emergency fund, contributing more to a 401(k) or 529 plan, pay off your mortgage, or do a home improvement project – anything that will improve your financial future.
If you get paid on Fridays:
- If your first paycheck for 2022 is on January 7, then your three paycheck months are April and September.
- If your first paycheck for 2022 is on January 14, then your three paycheck months are July and December.
IF YOUR FIRST PAYCHECK IS JANUARY 7, 2022
If you get paid biweekly, and your first paycheck is on January 7th, your paydays are as follows. Three-paycheck months are in red.
- January 7
- January 21
- February 4
- February 18
- March 4
- March 18
- April 1
- April 15
- April 29
- May 13
- May 27
- June 10
- June 24
- July 8
- July 22
- August 5
- August 19
- September 2
- September 16
- September 30
- October 14
- October 28
- November 11
- November 25
- December 9
- December 23
IF YOUR FIRST PAYCHECK IS JANUARY 14, 2022
If you get paid biweekly, and your first paycheck is on January 14th, your paydays are as follows. Three-paycheck months are in red.
- January 14
- January 28
- February 11
- February 25
- March 11
- March 25
- April 8
- April 22
- May 6
- May 20
- June 3
- June 17
- July 1
- July 15
- July 29
- August 12
- August 26
- September 9
- September 23
- October 7
- October 21
- November 4
- November 18
- December 2
- December 16
- December 30
How To take advantage of your 3 paycheck months
Have A Plan – If you plan, you can put the extra paychecks to work. Most people don’t have a plan and end up spending that money instead. Even worse, some people don’t even know what months those extra paychecks come in.
Build Emergency fund – If you don’t have an emergency fund, use the extra paychecks to start one. The rule of thumb is you need 6 months of expenses saved for emergencies such as an illness or unexpected job loss. Put emergency funds in a liquid account such as a money market account so that you can easily have access to the money without paying penalties.
Pay off your high-interest debt – if you have a high-interest credit card debt or a car loan, use the money to pay some of it off starting with the loan that has the highest interest rate.
Contribute to your retirement account – if you have an IRA or a Roth account, contribute to it to save for retirement. A few hundred dollars every month may not sound like much but due to the power of compounding, it will be worth a lot more in 20 or 30 years. If you don’t have one, it’s time to open one.
Contribute to a discretionary investment account – You can contribute to a discretionary account and invest in an index funds or in individual stocks. With these investments, you don’t have to wait until you are 59-1/2 to withdraw your money. You can also invest in dividend paying stocks. Dividends are a passive source of income that will nicely supplement your 9-to-5 job,
Pay off your mortgage – Consider paying off a portion of your mortgage. Check with your mortgage company to ensure that you have no prepayment penalties. If you do this, more of your future payments will go towards the principal and less towards interest.
Save for down payment on a house – If you don’t own a house, use the money to save for a down payment on a house
Save money for Christmas gifts – Save the money to buy Christmas gifts at the end of the year
Save for home improvement projects – Use the money to save for that dream home improvement project, whether it is renovating the kitchen or upgrading your media room.
Contribute to a 529 plan – College is getting expensive every year. The earlier you save, the less money you will have to pay out of pocket for your kids’ college expenses.
Bottom line
If you get paid biweekly, you will get two to three extra paychecks a year. What months you get the extra paychecks depends on your pay calendar. Have a plan in place to put those extra paychecks to work. Contribute to your retirement account or a discretionary investment account, save for a vacation or your dream home improvement project, pay off high-interest-rate loans, or contribute to a 529 plan to save for your kids’ college expenses.