6 Things to Do With Your Extra Paycheck

July 5, 2016

6 Things to Do With Your Extra Paycheck

Depending on when and how often you get paid, you may be fortunate enough to receive an extra paycheck this month. Woohoo!

Without a plan, your extra paycheck can quickly disappear and this month will be like any other. It also might be tempting to celebrate your extra paycheck this month by buying that (fill-in-the-blank) you’ve had your eye on, but before you do, consider doing one of these things instead.

1. Get Current

If you are behind on any of your bills, use the bump in your income this month to bring anything that is late or past due, current. Prioritize your rent or mortgage; utilities; and then car payment, before moving on to other bills.

2. Get Ahead

Are you current on your bills, but living paycheck-to-paycheck? Use this month to get ahead. While a single extra paycheck will not likely allow you to get ahead on all your bills, start with your rent or mortgage. You will appreciate the feeling of security that comes with having your rent or mortgage payment on hand well before it’s due.

3. Begin or Pad Your Emergency Fund

If you do not have any money set aside for emergencies, use this month to establish a small emergency fund. $1000 is a good place to start. Or increase your already-started emergency fund.

4. Pay Down Debt

Make a dent in one or more of your debts. Use the Debt Snowball method (paying your bills off in order from smallest to largest) to knock off any small debts you may have before moving on to the larger ones.

5. Put It Towards a Future Big Purchase or Expense

Vacation? Insurance premium? Car or house repair? College payment? Early Christmas shopping? If you have a large purchase or expense coming up, use your extra paycheck to prepare for it.

6. Open a Roth IRA

If you fall within the income limits, and you’ve “been meaning” to open an IRA, take advantage of your extra check to do so. Many brokerage firms will allow you to open a Roth IRA with no to low minimums.

So, with careful planning, you can leverage this month’s increase to put you in a better position financially. It may not be as exciting as (fill-in-the-blank…again), but your future you will thank you.

Are you getting an extra paycheck this month? What are your plans for it?