Build Wealth With The 3 Payday Month

Something very big is coming and for our family, it is only one month away. The 3 payday month. In this post, I will let you know what plans I have for our “extra” paycheck and some wealth building ideas you should consider if you have a 3 payday month coming.

How is it even possible to have 3 paychecks in one month you ask?

There are 4 weeks and a few extra days every month. After about 6 months, those few extra days add up to an extra payday. To explain mathematically might be easier to conceptualize. 52 weeks in a year divided by 2 (bi-weekly paycheck) equals 26 paydays. That is more than 2 paychecks per month. That means you have two months, per year, that will have 3 paychecks in one month.  Due to my employers pay schedule, these two months are usually in December and June or January and July.

Our budget revolves around two paychecks per month. 

In Our family budget or lack of one for that matter, relies on two paydays per month. The first payday is used to pay the mortgage and the second is used to pay credit card balances down to zero. Like clockwork, all of our bills are paid from those two paychecks per month. In a month where there are 3 paydays, such as next month, we should have extra money. WRONG! *We do not carry a credit card balance on our credit cards. We pay with credit cards for many items in our budget to earn points and or air miles. Please, Please. Only use credit cards if you can pay them in full each month.

The vanishing 3rd paycheck

Never once, in years gone by, have I made an intentional, concerted, effort to squirrel away the 3rd paycheck. I honestly do not have any idea where it has gone. Maybe we ate out more. Maybe we bought ourselves something nice. I’m not sure. I do know that, in the past, the 3rd paycheck has always been spent. Actually, I know where the last extra paycheck that came back in December went. It was used to pay for Christmas presents and a vacation to Hawaii.

The plan

In June my wife and I will have 3 paydays. For the first time, I plan to make a deliberate, mindful decision to use my 3rd paycheck to put the squeeze on my mortgage debt.

Paying down a debt of any kind, mortgage debt included, increases your net worth. Buying a new set of golf clubs does not!

See how I plan to pay off my mortgage early here.

In June, I plan to take our first paycheck and send it directly to the principal mortgage balance. The remaining two paychecks for the month will do what they normally do. Pay for groceries, transportation, credit cards, and the regular mortgage payment.

The 3rd paycheck is special

There is something extra special about that 3rd paycheck that comes every 6 months as well. Benefits are not deducted from the 3rd paycheck. The benefits have already been taken from the first two paychecks in the month. No medical or dental insurance. No union dues. No FSA or HSA deductions. The 3rd payday checks are big,  fat, and juicy, just waiting to be put to work. That money is yelling, “let me help you”

What should you do with the 3rd Paycheck? 

I have chosen to send my entire 3rd paycheck to my mortgage, however, you might be in a different financial position. Let’s look a couple other ideas that might be a good place to put your 3rd paycheck to work.

  • Start or build your emergency fund.
  • Pay down high-interest consumer debt like credit cards.
  • Pay down student loans.
  • Increase your 401k or 403b contribution.
  • Start or increase your Roth IRA contribution. Click here to see why everyone needs a Roth IRA.
  • Start a 529 college savings plan for your children.
  • Pay down your mortgage balance.
  • Take your spouse or partner to a fancy dinner.
  • Take a vacation.

Whatever you decide to do with your 3rd paycheck, make it intentional.

Building wealth requires intentionality and planning. Give every dollar you earn a job; pay down debt, build wealth or bring pleasure to your life. Not necessarily in that order, but those are the ingredients to success.

The timing of this post is no accident. In one month my extra paycheck is coming and I am making a plan that will pave the way for success.

What will derail my plan?

Going over budget in May will be the death-blow to my 3 payday month plan. I have the month of May to make sure I don’t go over budget. If June rolls around and I need to use my 3rd paycheck to pay for my mistakes in May, I will be staring down the barrel of failure.

To combat May budget creep, our family has put a moratorium on credit card purchases. In the month of May, we will not make purchases with our credit cards. Rather, we will be using cash for everyday purchases such as groceries and dining out.

For our family, a cash budget for groceries and dining out serves to give a tangible spending limit that credit and debit cards do not. When my wife looks in her purse or I look in my wallet and there is only $20 left, life gets real. At that point, priorities come into play. A decision must be made, a $5 Americano versus food for dinner. Immediate credit, in the form of a Visa card, distorts this reality.

I plan to report out my success (or failure) in my June Wrap-up post. Stay tuned to see if I can pull this off. Sending one whole paycheck to the mortgage principal balance would be the biggest, one-time, principal payment I have ever made. Wish me luck.

Do you have a 3 payday month coming? What are your plans for your extra paycheck? Leave me a message below and let me know. I would love to hear from you.

 Here are some of my other posts you may like:


8 thoughts on “Build Wealth With The 3 Payday Month

  1. Like you, our three paycheck months haven’t been used as well as they should have been. This last one though was used off to pay off a real estate investment, which was so much better of a use of the money than wherever the heck it went in the past.

    1. I always been frugal but I’m just now learning to be more mindful of where our money is going. I’m always inspired by your posts Angela. They give me motivation to be mindful.

  2. I won’t have another one of those until the fall. They are my favorite! My husband gets paid the 15th and the 30th, so he doesn’t experience my joy exactly. He also gets all of his summer checks in a lump sum. I always feel so rich the first week of June when I look at our accounts.

    1. Yes, the 3rd paycheck is something to behold. The difference this year is being mindful of using the paycheck to build wealth and avoid temporary lifestyle creep. It is funny how everyone’s paydays are so different. I thought about that when I was writing the post. I actually wonder what % of the US experiences 3 payday bliss. Thank you penny for reading and commenting.

  3. My employer is switching to bi-weekly (from bi-monthly) this summer. I never thought about the “free” extra paycheck, but it’s something I will think about now going forward!


    1. The “extra” paycheck is just one more mind game that we can use to move closer to financial freedom. I find that with these type of mind games, I am becoming more mindful of my money. Thank you for your comments.

  4. My husband’s employer just switched to paying him biweekly and it’s a bit weird! They do still take HSA, benefit, and 401(k) contributions out of the third paycheck. I like the biweekly paycheck for the more regular HSA and 401(k) contributions, but it certainly makes budgeting a bit more annoying when we were used to budgeting monthly! I find it fascinating that your employer doesn’t take benefits out of your third paycheck of the month. We are so used to monthly budgeting after 10 years of doing so, that we’re going to stick to our budgeting on the 1st of the month plan, with whatever income is there (in YNAB). I have been transferring the paychecks that come before the 25th of the month into savings until we budget them, to earn a bit more interest throughout the month.

    Our plan at the moment is for all “savings” money to be split 2/3 to a down payment fund in cash and 1/3 to our Vanguard taxable account. So that’s what will happen with the third paycheck this month!

    1. Sounds like you have adapted to the bi-weekly pay checks well. I have started splitting my roth IRA contributions and Vanguard taxable contributions to bi-weekly contributions as well to match my paychecks.

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