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Third Check Month | Entreprelife

Third Check Month

This is a guest post by my friend Steve Stewart of Money­PlanSOS. Steve is a Financial Coach and blogger. I asked him to write a guest post for me and he’s written a great one! Show him some love in the comments and make sure to check out his website: MoneyPlanSOS.com

For many employees, September will be a “3rd check month”. What I mean by this is that employees paid every-other Friday will get paid three times in two of the twelve calendar months each year. And September 2011 is one of those months.

What’s your plan?

Does this include you? If so, what are you planning to do with the 3rd check? If you are like most Americans you don’t even realize an addi­tional payday is coming, espe­cially if you have direct deposit.

What does, and can, happen:

  1. The typical American realizes they have more money in their bank account than usual. They realize they have an unex­pected windfall and it feels like “free money”. What a bonus! Then they go out and buy something, something fun and expensive.
  2. Almost 70% of Americans live paycheck-to-paycheck, so a 3rd payday is a blessing from the heavens that will help get through the next 14 days. The money is spent with no regard to the unusual increase and the process begins again on day #15.
  3. Some don’t realize that they ever received a third paycheck. They don’t even get to enjoy the thrill of having an increased balance to do something fun, something important, or something necessary. Instead, it sits in the account and starts to erode away each time a visit to Target or Wal-Mart was made.
  4. For those who use a budget or spending plan, this is the time they can make a big stride towards a goal. The goals are most likely paying down (or elim­i­nating) debt, putting an extra cushion into savings, or maybe getting closer to purchasing an item they had already been saving for.

So a 3rd paycheck can be blown all at once, frittered away, a missed oppor­tu­nity, or given a purpose when used to increase your net worth AND your quality of life.

Which one are you?

If you don’t make a choice then you probably will end up being one of the first three. But if you pay attention and have a plan you will be very wise.

Six months from now, will you be able to see what became of the 3rd check in the month? What’s your MoneyPlan?

What do you normally do when you get an extra paycheck? Let me know in the comments!

5 Responses to “Third Check Month”

  1. Alex September 6, 2011 at 8:00 AM #

    Since I’m self-employeed I don’t get an “extra paycheck” anymore; but when I did I had two methods for using it.

    Before I learned how to budget, I use to consider it an “extra” paycheck. However, it was never really extra. I blew all of my paychecks so when I got this third paycheck I thought I would be able to blow it or save it but I always ended up spending it on bills (or eating out).

    After I learned to save these paychecks went imme­di­ately into savings. This new method is one of the reasons I have been able to work without a paycheck for a few months.

  2. Moe September 6, 2011 at 3:26 PM #

    I only get paid the 15 of the month and the last day of the month. Yeah, no extra check for me. #bummer.

    With that said, fantastic post, I would defi­nitely put it to elim­i­nating debt. That’s wise.

    • Alex September 7, 2011 at 10:44 AM #

      Drag. But I bet you get some nice big paychecks every so often. lol

  3. Ixnayonthetimmay September 8, 2011 at 5:29 AM #

    The wily and elusive third paycheck is kind of an illusion when one looks at it. Often, though the 3rd paycheck falls in the bounds of the month, it is effec­tively unusable in that regard because of how ones bills fall due, so it is more akin to the first paycheck of the next month.

    I have set up in my budget an ‘escrow’ method whereby part of my next check goes into an account so that my bills can be paid out of that account when they are due. This way, I’ll always have the money in the account. Because of this, I can’t treat that extra check as an actual extra check until about two months after I get it, meanwhile waiting for the paydays to “drift” back. After then, it’s all available for whatever goals and I can still meet my monthly obligations!

    • Alex September 8, 2011 at 9:14 AM #

      Wow, that’s a really clever way to use it. I would never have thought of that.

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