For employees who receive their paycheck every other week, November brings a financial boost in the form of a third paycheck. This occurrence, which typically happens twice a year, can provide a significant financial cushion, especially with the holiday season approaching.
Matthew Goldberg, a representative from Bankrate, suggests that employees should budget for the usual two-payday month throughout the year. This way, the extra paycheck can feel more like a bonus. For instance, if an employee earns $5,000 of income after taxes and withholdings each month and has $100 remaining after all monthly expenses, a third paycheck would provide an extra $2,600.
This additional income can be used in various ways to improve financial health. It can help establish or add to an emergency fund, pay down high-interest debt, or cover holiday expenses. Some might even choose to apply this extra paycheck toward multiple financial goals.
Goldberg also suggests considering a high-yield savings account for this extra income. These accounts, often found at online-only banks, are federally insured and can provide a safe and profitable place to store extra funds.
However, it's important to note that the occurrence of a three-payday month depends on the timing of an employee's first paycheck of the year. For those paid on a bi-weekly basis, the first three-paycheck date in 2024 will be on March 29, and the second will be on August 30. For those paid weekly, five-paycheck months will occur in March, May, August, and November in 2024.
Bankrate advises employees to plan ahead for these months and consider how best to utilize the extra income to improve their financial situation.