How to budget for a 3-paycheck month, Part 2: How to adjust your budget

How to budget for a 3-paycheck month, Part 2. This isn’t a post about what to spend your 3rd paycheck on; it’s a post about how to adjust your budget when you get three paychecks in one month—and why you have to look at a total of two months of paychecks before you do anything drastic.

This post has been updated for 2020, and the 3 paycheck months for 2020 are January and July. The examples below are for 2019 (March and August were 3 paycheck months) but the info is correct.

In March and August in 2019, many people who get paid every other Friday will get three paychecks. (If March and August aren’t your 3-paycheck months but you do indeed get paid every other week, simply look at a calendar and put a big red circle around the two months in which you’ll get paid three times.)

Paid every other week = 26 paychecks a year. There are 12 months in a year. If your budget thinks you only get paid twice a month, that’s 24 checks, not 26. You get to decide how to spend those “extra” two paychecks. Read Part 1 to find out the easiest way to save two paychecks a year: How to Budget for a 3 Paycheck Month Part 1: How We Stopped Depending on 26 Paychecks.

How to adjust your budget when you get three paychecks in one month:

I don’t do sponsored posts! I do use affiliate links—that means your price doesn’t change and I get a kickback from Amazon, etc. Using my links helps keep All Day Mom sponsor-free so you know you’ll always get honest advice. I recommend you check Rakuten first for current Amazon categories that offer cash back (Rakuten: sign up here for $10 bonus or check Amazon cash back offers on Rakuten here) and if there is not a cash back offer there, please consider using my Amazon link here for your shopping. Thank you!”

Example:

$2500 each paycheck.
Getting paid on:
- March 1st
- March 15th
- March 29th
Spending that 3rd paycheck on vacation.

Again, read Part 1 here for how to build your vacation fund without touching your regular budget.

If you don’t spend your extra paycheck on vacation, insert your plans, e.g., debt payoff, budget buffer, dining table, new car fund.

If you don’t currently keep cash that totals next month’s bills in your checking account, you can’t simply spend that third paycheck. Here’s why:

March 1st: Pay bills according to budget.
March 15th: Spend paycheck. (This is what most people assume is safe to do.)
March 29th: Pay bills according to budget.
April 12th: Pay bills according to budget.
April 26th: Pay bills according to budget.

It doesn’t matter which check you pick to spend. If you spend one paycheck in March, you will go 27 days without a paycheck.

If you spend Paycheck #1 March 1st, you’ll go 27 days without a paycheck between February 15th and March 15th.
If you spend Paycheck #2 March 15th: 27 days without a paycheck.
If you spend Paycheck #3 March 29th: 27 days without a paycheck.

If you don’t have cash on hand that equals one month of bills and household spending (groceries, gas, toilet paper) in your checking account, let all three March paychecks sit in your checking account until you get your first check in April.

Pay bills/spend money in March according to your normal budget.
On April 11th (before you get paid on April 12th), you should still have a large chunk of cash in your checking account.
April 12th—your first check after the 3 paycheck month—is the time to decide what to do with that 3rd paycheck—on April 12th, you’ll get your first April paycheck, and you can pay your April expenses—and what is left over is the remaining amount of that “extra” paycheck in March.
This works for any 3 paycheck month. Don’t spend the third paycheck the month you get it. Wait to spend the third paycheck until you get your first paycheck of the following month.

Why this is important: If you don’t have a full month’s worth of money bills sitting in your checking account, and you spend one paycheck in a 3-paycheck month, you will probably end up borrowing from your savings accounts (or charging bills/groceries/gas) when you have that long 27-day stretch between paychecks.

I’ve tried a few different ways to adjust my budget in a 3 paycheck month, but letting the extra check sit until the smoke clears on all that month’s expenses is the best way to not make a budget mistake. This is especially important in 2020, when January is the first 3 paycheck month, because those final Christmas bills will roll in.