Consumer Alert: You might get an extra paycheck this month. Advice from an expert on how to use it
ROCHESTER, N.Y. – Your consumer alert is all about March money madness. If you’re paid every two weeks, you could be getting an extra paycheck this month. If you’re a W2 employee who is paid bi-weekly, there are only two months out of the year when you get three paychecks. Depending on your pay schedule, that month may be March. So we have to make the most out of this extra check.
While the first inclination may be to go on a spending spree, experts say resist the impulse. That’s because we don’t know what the future may hold. Big retailers like Walmart and Home Depot are predicting soft sales ahead because those executives believe we could still see a recession this year. When the storm clouds of our financial lives approach, we need to have a savings umbrella, so says News10 NBC finance wizard and Managing Director of Invessent Wealth Management, Jarrett Felton.
“You do want to pay yourself first, but not in the traditional sense of a vacation or buying anything frivolous, but I think we should start by saving in our emergency savings in case down the road when we don’t have that third paycheck, we can now go back to what we saved when we did, to save us in the event that something takes place,” said Felton. “So step one is start building up that emergency reserve and that surplus so that when something comes up, the unexpected, you’re prepared.”
And you may need that emergency reserve sooner than you think. Consider the fact that the tax deadline is around the corner. If you think you may owe money, that extra paycheck will come in handy.
If you already have some emergency savings sacked away, Felton says use the extra cash to pay off credit card debt. Take a look at your cards and the interest rates. You can approach the debt one of two ways. Either put that extra paycheck toward the card with the highest interest rate, or use it toward the card with the lowest balance so you can pay it off.
Lastly, you could put that money toward your retirement account. You’ll thank yourself later. So. if your first paycheck of the year was January 6th, you’ll get three paychecks this month and in September. If your first check was on January 13th, you’ll get three paychecks in June and December.