If you get paid biweekly, you’ve probably noticed those magical three-paycheck months. You might have thought the company’s payroll team made a mistake—but luckily, they didn’t. You’ll get at least two of these “bonus months” every year. And yes, doing a little happy dance about it is totally okay. But have you planned how to use that extra income?
Why Do We Get Three Paychecks in Some Months?
When you’re on a biweekly pay schedule, you’ll receive 26 paychecks over the 52 weeks in a year. That means two months out of the year will have three paychecks instead of the usual two.
Those two extra paychecks can feel like a windfall, but without a plan, they tend to disappear as quickly as they hit your checking account.
First Step: Mark Your Extra Paycheck Dates
The first thing you should do is figure out when those extra paychecks will arrive each month. Grab a calendar, note your pay dates for every month of the year, and highlight the two extra paychecks. Calendar reminders can help you remember when the extra funds are coming. Since the dates of these extra paychecks change every year, tracking them in advance is crucial.
There’s No “One-Size-Fits-All” Plan for Extra Income
Samuel Dean, founding partner of a wealth management firm, says there’s no universal rule for planning extra income—it depends on your personal situation and financial goals. For example, you might choose to build some extra room into your annual budget, or earmark the surplus for specific uses.
5 Tips for Budgeting Your Three-Paycheck Months
If you’re asking yourself, “How should I budget my extra paychecks?” here are five tips to consider when planning for those three-paycheck months:
1. Pay Off Debt
When figuring out how to use your extra income, start by looking at your debt. “I usually tell my clients that the first thing to do is get rid of high-interest debt, usually credit card debt,” Dean says.
List out all your debts, sorting them by balance and Annual Percentage Rate (APR). Paying off debt with the highest APR will save you the most money, as this is where you’re accruing the most interest on your balances.
For instance, if your credit card balance is close to your credit limit, a high credit utilization rate (the ratio of your credit card balance to your credit limit) could hurt your credit score. Alternatively, paying off some low-APR, low-balance debts can help you build momentum and gain other financial benefits. You could also use the extra paychecks to make payments toward student loans or car loans.
If your biweekly budget already covers regular debt payments, using the extra paychecks to pay down more debt will reduce what you owe—and the interest that accumulates each month—freeing up more cash from future three-paycheck months.
2. Build or Boost Your Emergency Fund
Paying off debt isn’t your only option when incorporating extra paychecks into your biweekly budget. “It’s really important to look at whether you have enough emergency savings,” says Dan Stous, CERTIFIED FINANCIAL PLANNER™ and chief wealth advisor at a financial planning and investment management firm.
An emergency fund that covers three to six months’ worth of regular expenses can help you get through financial hardships—like job loss or medical emergencies—without taking on new debt.
Keeping this money separate from your regular checking and savings accounts can help ensure you only use it for unexpected costs (and reduce the temptation to spend it on non-emergencies). Typically, the best way to store emergency funds is in a high-yield savings account. You could also keep the money in other accounts—for example, you might consider putting your emergency fund into a certificate of deposit (CD).
If you’re planning to create an emergency fund or grow an existing one, you could set up an automatic transfer of your extra income into your emergency fund account. Automating savings is also a great way to budget your extra earnings.
3. Save for Big Goals
There are plenty of simple ways to save money, and those two extra paychecks can go a long way. For example, if you’re saving for a new car, a down payment on a house, or want to boost your retirement accounts, putting the full amount of two out of your 26 paychecks into savings is a great start.
“If a client has no debt and is in a good place financially, they might focus on other goals,” Dean says. If you have a specific financial goal in mind, a useful budgeting tip for biweekly pay is to immediately transfer the two extra paychecks from your checking account into a savings account or a tax-advantaged retirement account.
If you have a 401(k) through your employer and already contribute enough to get the full annual match, Dean recommends considering a Roth Individual Retirement Account (Roth IRA). Roth IRAs offer a range of savings products designed for retirement.
For a bolder goal: “You could save up to start a business,” Dean says. If you plan to launch a business someday, setting aside your extra annual paychecks as startup capital is a smart move.
4. Prepay Bills
If you already have an emergency fund, no current debt, and are making good progress on your savings goals, try this budgeting tip for three-paycheck months: prepay some of your monthly bills.
“If you have the ability to prepay some bills, it can reduce anxiety in the months ahead,” Dean says.
Before using this tip, check with your providers to confirm you won’t face prepayment penalties and to understand any limits on early payments. For example, some providers may even offer discounts or rewards if you pay your car insurance annually instead of monthly. You could also ask if prepaying bills like utilities, phone plans, or rent makes sense.
5. Fund a Well-Deserved Reward
If you’re still struggling to plan your extra income, remember that personal finance isn’t just about money—emotions play a big role in managing your finances, as they often drive decision-making. Embracing this idea can help you manage your money successfully.
“From an emotional and behavioral standpoint, people should reward themselves for being responsible,” Stous says. “Simply put: treat yourself.”
Maybe you want to plan your next vacation to escape the daily grind, or you’ve been looking forward to a date night at your favorite restaurant. There’s no need to feel guilty about setting aside some of your biweekly budget for personal spending.
Choosing How to Use Your Extra Paychecks
When deciding how to budget your extra paychecks, you might find yourself torn between different options.
“If you have extra income and a goal to reduce debt, you might put all that money toward that goal,” Stous says. On the other hand, he notes, you might be aiming to retire in 10 years but aren’t on track—and are wondering how to catch up on retirement savings. “In that case, it makes sense to put that money, or at least a portion of it, toward that goal.”
While everyone’s biweekly budget plan will look different, being disciplined and proactive about using the savings opportunities from three-paycheck months can help you build a strong foundation for your future finances.
Stay on Top of Budgeting
Keep a budgeting mindset and stay aware of your bills. Want a way to keep your monthly utility costs steady? Learn what a budget billing plan is and decide if it’s right for you.
Home
detail
How to Budget for Biweekly Payroll
2025-10-16T18:46:32
If you get paid biweekly, you’ve probably noticed those magical three-paycheck months. You might have thought the company’s payroll team made a mistake—but luckily, they didn’t. You’ll get at least two of these “bonus months” every year. And yes, doing a little happy dance about it is totally okay. But have you planned how to use that extra income?
Why Do We Get Three Paychecks in Some Months?
When you’re on a biweekly pay schedule, you’ll receive 26 paychecks over the 52 weeks in a year. That means two months out of the year will have three paychecks instead of the usual two.
Those two extra paychecks can feel like a windfall, but without a plan, they tend to disappear as quickly as they hit your checking account.
First Step: Mark Your Extra Paycheck Dates
The first thing you should do is figure out when those extra paychecks will arrive each month. Grab a calendar, note your pay dates for every month of the year, and highlight the two extra paychecks. Calendar reminders can help you remember when the extra funds are coming. Since the dates of these extra paychecks change every year, tracking them in advance is crucial.
There’s No “One-Size-Fits-All” Plan for Extra Income
Samuel Dean, founding partner of a wealth management firm, says there’s no universal rule for planning extra income—it depends on your personal situation and financial goals. For example, you might choose to build some extra room into your annual budget, or earmark the surplus for specific uses.
5 Tips for Budgeting Your Three-Paycheck Months
If you’re asking yourself, “How should I budget my extra paychecks?” here are five tips to consider when planning for those three-paycheck months:
1. Pay Off Debt
When figuring out how to use your extra income, start by looking at your debt. “I usually tell my clients that the first thing to do is get rid of high-interest debt, usually credit card debt,” Dean says.
List out all your debts, sorting them by balance and Annual Percentage Rate (APR). Paying off debt with the highest APR will save you the most money, as this is where you’re accruing the most interest on your balances.
For instance, if your credit card balance is close to your credit limit, a high credit utilization rate (the ratio of your credit card balance to your credit limit) could hurt your credit score. Alternatively, paying off some low-APR, low-balance debts can help you build momentum and gain other financial benefits. You could also use the extra paychecks to make payments toward student loans or car loans.
If your biweekly budget already covers regular debt payments, using the extra paychecks to pay down more debt will reduce what you owe—and the interest that accumulates each month—freeing up more cash from future three-paycheck months.
2. Build or Boost Your Emergency Fund
Paying off debt isn’t your only option when incorporating extra paychecks into your biweekly budget. “It’s really important to look at whether you have enough emergency savings,” says Dan Stous, CERTIFIED FINANCIAL PLANNER™ and chief wealth advisor at a financial planning and investment management firm.
An emergency fund that covers three to six months’ worth of regular expenses can help you get through financial hardships—like job loss or medical emergencies—without taking on new debt.
Keeping this money separate from your regular checking and savings accounts can help ensure you only use it for unexpected costs (and reduce the temptation to spend it on non-emergencies). Typically, the best way to store emergency funds is in a high-yield savings account. You could also keep the money in other accounts—for example, you might consider putting your emergency fund into a certificate of deposit (CD).
If you’re planning to create an emergency fund or grow an existing one, you could set up an automatic transfer of your extra income into your emergency fund account. Automating savings is also a great way to budget your extra earnings.
3. Save for Big Goals
There are plenty of simple ways to save money, and those two extra paychecks can go a long way. For example, if you’re saving for a new car, a down payment on a house, or want to boost your retirement accounts, putting the full amount of two out of your 26 paychecks into savings is a great start.
“If a client has no debt and is in a good place financially, they might focus on other goals,” Dean says. If you have a specific financial goal in mind, a useful budgeting tip for biweekly pay is to immediately transfer the two extra paychecks from your checking account into a savings account or a tax-advantaged retirement account.
If you have a 401(k) through your employer and already contribute enough to get the full annual match, Dean recommends considering a Roth Individual Retirement Account (Roth IRA). Roth IRAs offer a range of savings products designed for retirement.
For a bolder goal: “You could save up to start a business,” Dean says. If you plan to launch a business someday, setting aside your extra annual paychecks as startup capital is a smart move.
4. Prepay Bills
If you already have an emergency fund, no current debt, and are making good progress on your savings goals, try this budgeting tip for three-paycheck months: prepay some of your monthly bills.
“If you have the ability to prepay some bills, it can reduce anxiety in the months ahead,” Dean says.
Before using this tip, check with your providers to confirm you won’t face prepayment penalties and to understand any limits on early payments. For example, some providers may even offer discounts or rewards if you pay your car insurance annually instead of monthly. You could also ask if prepaying bills like utilities, phone plans, or rent makes sense.
5. Fund a Well-Deserved Reward
If you’re still struggling to plan your extra income, remember that personal finance isn’t just about money—emotions play a big role in managing your finances, as they often drive decision-making. Embracing this idea can help you manage your money successfully.
“From an emotional and behavioral standpoint, people should reward themselves for being responsible,” Stous says. “Simply put: treat yourself.”
Maybe you want to plan your next vacation to escape the daily grind, or you’ve been looking forward to a date night at your favorite restaurant. There’s no need to feel guilty about setting aside some of your biweekly budget for personal spending.
Choosing How to Use Your Extra Paychecks
When deciding how to budget your extra paychecks, you might find yourself torn between different options.
“If you have extra income and a goal to reduce debt, you might put all that money toward that goal,” Stous says. On the other hand, he notes, you might be aiming to retire in 10 years but aren’t on track—and are wondering how to catch up on retirement savings. “In that case, it makes sense to put that money, or at least a portion of it, toward that goal.”
While everyone’s biweekly budget plan will look different, being disciplined and proactive about using the savings opportunities from three-paycheck months can help you build a strong foundation for your future finances.
Stay on Top of Budgeting
Keep a budgeting mindset and stay aware of your bills. Want a way to keep your monthly utility costs steady? Learn what a budget billing plan is and decide if it’s right for you.