July has five Fridays this year. If you get paid every other Friday, you receive three paychecks instead of two. Financial advisors have gathered to explain how you should spend money that was already yours.
The extra paycheck is not extra. You still work the same number of hours. You still earn the same annual salary. The calendar just landed weird. But personal finance gurus treat this like found money, as if your employer accidentally wired you a bonus for showing up in a month with 31 days.
The advice is always identical. Pay down debt. Build your emergency fund. Invest the difference. These are the same three things they tell you to do with tax refunds, birthday checks, and loose change you find in the couch. At no point does anyone suggest you were already supposed to be doing this with your regular paychecks.
The real issue is budget illiteracy. If three paychecks in July breaks your financial model, your model was a napkin with two numbers on it. People who budget by paycheck instead of by month are the same people who think a tax refund is the government being generous. They overpaid all year and celebrated getting their own money back without interest.
Here is how to make the most of your three-paycheck month. Divide your annual salary by twelve. Spend that amount every month. Done.
The biweekly pay schedule creates 26 paychecks a year. That is 2.17 paychecks per month on average. Two months will have three. This has been true since biweekly payroll was invented. It will continue to be true until we switch to a ten-month calendar or pay people in cryptocurrency that only exists on Tuesdays.
If your financial breakthrough is noticing that 26 divided by 12 does not equal 2, you should not be managing money. You should be hiring someone who passed fourth grade.
Photo by Glen Carrie on Unsplash
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