How to Save 2 Full Paychecks Every Year

Michael Timmermann | December 28th, 2020

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If you want to get out of debt, stash away more for retirement or control excessive spending, making a simple tweak to your budget could save you thousands of dollars!

I’ve been using this budgeting strategy for more than a decade to painlessly save two full paychecks a year.

Paid Every 2 Weeks? Try This Simple Budgeting Trick

Here’s an example: Let’s say that after taxes, health insurance and retirement savings are deducted, your employer deposits a check for $1,000 into your checking account every two weeks.

Since there are 52 weeks a year, that’s 26 checks. Your annual take-home pay is $26,000.

If you’ve always been paid this way, you may not realize that you’re receiving two more paychecks a year than someone who’s paid twice a month.

Twice a month = 12 months x 2 = 24 checks
Every other week = 52 weeks / 2 = 26 checks

If you’re paid every other week, you’ll typically receive two paychecks a month, except for the two months of the year when you’ll get three paychecks.

Just pull out a calendar to identify the three-paycheck months based on your employer’s pay schedule.

Treat the Third Paychecks As Bonus Money!

Here’s where the budgeting trick comes in. With the help of an online budgeting tool, I set my projected monthly income based on receiving two paychecks a month and nothing else.

Because those three-paycheck months only come twice a year, I treat those checks like bonus money!

Maximize Your 3-Paycheck Months

Need some ideas? When I was working to pay off my mortgage early, I would use those “extra” paychecks to reduce the loan’s principal balance.

But you could use that money to reach other financial goals as well:

Pay off a debt
Contribute to a retirement account
Add to your new car fund
Pay an insurance policy premium (auto, home, life)
Grow your emergency fund
Erase student loan debt
Start a vacation fund
Save up for a home renovation

Get a Plan Together Now!

If you decide to use this strategy, the key is to make a plan for your third paychecks well ahead of time so that you spend your money wisely when that direct deposit hits your account.