budgeting

The Third Weekend

A phenomenon exists which can wreak havoc on your personal finances. People who get paid bimonthly and attempt to match their budget and pay period cycles are well aware of this phenomenon. I call it the third weekend, and if it’s not handled correctly it could be a budget killer.

What is the Third Weekend?

The third weekend phenomenon is when three weekends exists within a single pay period. People paid bimonthly have 24 pay periods in a single year (2 per month). When looking at a calendar for budgetary purposes, one normally finds 2 weekends within each bimonthly pay period. But, because there are 52 weeks in a calendar year, there are 4 pay periods that contain 3 weekends instead of 2.

Budget Difficulties

A common budgetary method is to pay all your bills, allocate for necessities, put some into savings, and the rest is discretionary funds. Since most discretionary funds are spent on the weekend, it makes sense to divide those funds in half and you have an amount available for fun per weekend. When a third weekend occurs within a single pay period, you now have to divide those discretionary funds by three, instead of two. This greatly reduces the amount of discretionary funds available. Having less funds available could lead to overspending, debt, or even a small financial crisis.

Handling the Third Weekend

Many solutions exist for handling this phenomenon, here are a few:

• Cut Spending: For those pay periods with an extra weekend, divide your discretionary funds by 3, and spend less for for every weekend within the pay period.
• Look ahead: Know when an occurrence of the phenomenon is approaching, and plan accordingly. Sometimes the timing of activities will not allow for reduced spending. Redistribute your weekend spending in the weeks preceding to make up for when the phenomenon occurs.
• Emergency Fund: A well stocked emergency fund (or savings) can be used to help restore spending levels if needed. Of course, make sure you have a plan to refund your emergency fund.

The point is, budgets have to be fluid and constantly reevaluated. If you know when the third weekend phenomenon will occur, you can plan ahead, save up, and redistribute funds accordingly to prevent overspending, debt, and even financial crisis.

How about you, Clever Friends, how to do you handle the phenomenon of the third weekend?

Read More

Check out these additional Clever Articles:

• Advantages and Limits of Budgeting
• We Re-Invented the Envelope Budgeting Method By Accident
• Budgeting Techniques: Prioritize Purchases vs Delayed Spending