You aren't actually earning any extra money -- it's simply a matter of good timing. An 'extra' paycheck in May can help you sort out your budget, but treat the money as you would any other paycheck.
EL SEGUNDO, CA (PRWEB) May 29, 2013
Saving money and adhering to a budget continues to be a challenge for most Americans. According to Credit Donkey, about 55 percent of Americans saved less than $100 per month in 2012. Luckily, GoBankingRates reveals those who receive paychecks bimonthly can expect to receive an "extra," third paycheck in May and provides strategies for using a bigger May budget to get ahead financially.
“An extra paycheck this month can feel like a financial reward, especially if you are used to budgeting with only two pay periods per month,” says Jennifer Calonia, editor for GoBankingRates, “but knowing how to budget your extra May paycheck, rather than blowing the money, will set yourself up for long-term financial success.”
As part of their latest report, GoBankingRates lists four ways employees can maximize their third May paychecks and boost savings account funds for the month, which include:
1. Paying Down Debt
An extra paycheck can be used to hack away at burdensome debt, according to the report. Employees who will enjoy an extra paycheck this May can use the cash to significantly reduce existing debt and avoid added finance charges from high interest rates.
GoBankingRates recommends paying off high-interest debt first, like credit cards, but also notes paying off a mortgage loan early can also be beneficial for a long-term plan.
In fact, Deacon Hayes of WellKeptWallet.com recommends, “Make an extra mortgage payment. If you have a 30-year mortgage, this could shave up to eight years off your mortgage.”
2. Spending Strategically
While growing a savings account is the main focus of the analysis, GoBankingRates also emphasizes the importance of preventative-based expenses. For example, the report cites the benefit of replacing a vehicle’s brake pads at the expense of $75 to $100 in order to prevent further high-cost complications down the line, such as damaged rotors, drums or calipers.
Ms. Calonia advises that employees remember, "You aren't actually earning any extra money -- it's simply a matter of good timing. An 'extra' paycheck in May can help you sort out your budget, but treat the money as you would any other paycheck."
For questions about this report or to speak with Jennifer Calonia, please use the contact information below.
GoBankingRates.com is a national website dedicated to connecting readers with the best interest rates on financial services nationwide, as well as informative personal finance content, news and tools. GoBankingRates.com collects interest rate information from more than 4,000 U.S. banks and credit unions, making it the only online rates aggregator with the ability to provide the most comprehensive and authentic local interest rate information.
Jaime Catmull, Director of Public Relations
Source: Credit Donkey, “Scary: Americans Saving Less Than $100 a Month,” February 2013.