Why Do You Need an Emergency Fund?
- Job loss or unemployment
- Medical or dental bills
- Home repairs
Psst…come closer. Did you know that if you get paid bi-weekly, for two months out of every year, you’ll receive a third paycheck?
It’s true! Each calendar year has 52 weeks…if you get paid every other week, you’ll be paid 26 times in a year. Most months, you‘ll be paid twice, but for two months out of a year, you’ll receive a third paycheck.
Those 2 extra paychecks a year could go a long way toward helping you start saving money. Think of it this way…there are a number of expenses, such as, rent, utility bills, and car payments that you pay every single month.
For 10 months, you cover living expenses and other bills with just two paychecks. The other 2 months, you get a third paycheck but no additional expenses. If you weren’t aware of this, you may have been spending your extra paychecks without noticing.
But if you can maintain the same lifestyle for all 12 months, those extra paychecks can go right into savings! To make sure you don’t forget, you can automatically deposit your extra paychecks directly into a savings account. All you need to do is plan ahead.
So when an unexpected expense comes up…or you want to go on that dream vacation…or want to send your kids to college…you will be glad you transferred those two paychecks a year into savings instead of having them disappear and be unaccounted for.
So plan for these extra paychecks, automate, and learn to love the sweet sound of money hitting your bank account!
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1 Study by T. Rowe Price Retirement Plan Services.