The “extra check”

           Getting paid every week or every-other week most have it figured out that they have what they consider an extra check some months.

            To me the debate is it actually and extra check? If you get paid every other week then you probably see two of these months when you actually are getting three checks for the month instead of two. If you get paid every week you probably see five of these but check you calendar to be sure.

            To truly make it an extra check try this approach:

            Figure how much you need to cover your regular monthly bills. Total everything for the whole month. If you get paid every other week divide this total by two, if every week by four. This is what you must have set aside from every regular paycheck to cover your monthly expenses.

            If you have trouble keeping track of how much of your balance is available for other spending, consider transferring this amount to a separate checking account, reserved just for your bill payments.

            Now add up your irregular bills during the year. These include any bills or expenses that aren’t due monthly and can include everything from taxes to insurance, holiday presents and/or back to school supplies. Now divide the annual totals of all these expenses by 24, and arrange to have the amount transferred out of your checking account to a savings account twice a month. I recommend/like ING The Orange Savings Account. Great rates, no fees, no minimums.

            As you go, make adjustments. You may have been using your first paycheck every month to cover a big bill, like your mortgage/rent or car payment. Give yourself some room by paying that bill ahead, setting aside enough cash from your other checks to cover the next months “shelter”. You’ll have one very tight month as you get started, but you’ll get ahead of it.

            Now plan for the extra cash. When your regular bills are covered and your saving ahead for your annual expenses you can put the “extra” paychecks to good use. How you do this totally depends on your budgeting system and your priorities.

            The important thing is to have a plan and to follow through when the money actually gets to you.

© 2008, Bruce Mc. All rights reserved.