Optimal Finance Daily - Financial Independence and Money Advice 3148: What to Do with That Extra Third Paycheck by Kumiko of The Budget Mom on Intentional Spending
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May 19, 2025 Kumiko Love dives into the smart handling of that rare extra paycheck. She emphasizes the importance of intentional spending rather than impulse purchases. With practical strategies, she encourages listeners to align this bonus with their financial goals like debt repayment or savings growth. A relatable example illustrates the decision-making process for effective money management. Ultimately, it's all about maximizing this unique financial opportunity without losing sight of your priorities.
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Why Third Paychecks Happen
- A third paycheck occurs because bi-weekly pay results in 26 paychecks per year, not just 24.
- The calendar structure causes two months annually to have three paychecks instead of two.
Plan Ahead for Extra Paychecks
- Mark your calendar to identify months with a third paycheck in advance.
- Plan purposefully for this extra income to prioritize emergencies, unavoidable expenses, and financial goals.
Prioritize Third Paycheck Use
- Start by building an emergency fund with your extra paycheck before tackling other expenses.
- Use the remaining funds to cover inevitable costs or to advance your highest financial priorities like debt or savings.