Ever wish or feel like if you just had one or two more paychecks you could get your finance on track? Well you are in luck this month, if you are on a biweekly pay schedule you will have that extra paycheck you have been wishing for. The month of May has five weeks so many of us will receive three paychecks instead of two this month.
The larger question is what you are going to do with your extra paycheck. Are you going to pay bills, treat yourself, blow the check on who knows what or use the check to help build your financial future?
I would like to persuade and encourage you to do the later. Not only will using this extra check to help build your financial future reduce your stress today, it will also ensure that you will have a financially stress free future.
Option 1 – Emergency fund
Having an emergency fund of at least $1,000.00 can take the stress out of many situations. When we are less stressed we are able to focus and make better decisions in all areas of life. For most having an emergency fund gives you a sense of security. When the car breaks down or when something goes wrong you will be able to manage and solve the problem knowing you have your emergency fund to fall back on.
Option 2 – Paying off
This may not be an option that you like. However the truth is when you pay off debt you free up money to that can be used on things that you like. The key to making this work for your is not make any new debt. This may mean freezing, cutting up or closing your credit card accounts to make sure you don’t end up back in debt, however it will be well worth it.
Option 3 – Contributing to retirement
The younger you are the more this will work in your favor. Let the magic of compound interest work for you. When you contribute to your retirement compound interest is your friend. If you don’t have a retirement account opening an IRA (Individual Retirement Account) would be a great way to use the extra paycheck. If you opened a Roth IRA your money would really be working for you because not only would you get the benefits of compound interest but your money would also grow tax-free.
Now I understand if you can’t commit to doing any of this this month. The great news is that the paychecks in one month phenomenon happens at least twice a year, so mark your calendar for October and make a plan to make your money work for you instead of the other way around.