Are you paid biweekly? These are your 2 three-paycheck months in 2023 and strategies of how to plan to get the most from them.

January is here and with the new year, many of us make resolutions and plans to make the best out of 2023. Planning our finances, is for many, the place where we start.

Being paid every two weeks as a W-2 employee means that in two months of every year, you receive three paychecks. This is a great opportunity to make those two paychecks really count. The two best ways to accomplish this is to be on a budget and to plan now where that money is going to go.

When are the three-paycheck months?

If your first paycheck in 2023 falls on January 5th or 6th, your three paycheck months are March and September.

If your first paycheck in 2023 falls on January 12th or 13th, your three paycheck months are June and December.

Why being on a budget matters?

Being on a budget for many seem restrictive may conjure up a scarcity mindset. Actually, budgeting can actually have the opposite effect. A proper, well-throughout budget gives each of your dollar bills a job to do. That money you budget to spend on clothes, going to the movies, or eating out each month lets you do so without guilt and worry knowing you’re on a plan. Planning your month based off two paychecks liberates the extra paycheck on your three paycheck month to do another job.

Options for that third check

Whether you are trying to get out of debt or increase your savings rate, getting an extra paycheck a couple times per year can have a significant impact. Here is one track to maximize your financial well-being.

The first is to have an emergency fund. 60% of Americans have less than $300 in savings. According to the Federal Reserve, the average unplanned emergency expense in 2022 is $1,400. If you don’t have cash at least $1,000 in cash emergency savings in a separate account, consider using your extra paycheck to establish one, or increase the balance.

If your emergency fund is adequate but you have debt, especially the most expensive kind, credit card debt, consider utilizing that extra check to pay down or off the balances on those cards. With the significant increase in interest rates in 2022, credit card rates are up significantly.

If your emergency fund is adequate and you are not carry credit card balances, then consider investing those extra dollars in a Roth IRA. Withdrawals of contributions from a Roth IRA can be made at any time without taxes or penalties. Be sure to contact your financial advisor for information on your individual circumstances.

This is not specific individual financial advise but rather is being provided for informational purposes only.

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