Money·3 min read

How to Paycheck Yourself

How to paycheck yourself_face the future money tree with dollar bills falling
Sep 16, 2019

The Story

Whether you got a bonus or cash birthday gift, it’s Friday night and you just (just just) got paid. 51% of Skimm'rs say they'd put a sudden influx of money right into their savings account. 41% would use it to pay down debt. There are lots of things you can do with an influx of money when it hits – here’s how to be smarter about how you de.le.gate... 

Don’t debt yourself.

Debt can seriously drain your earning power, especially when it's eating into a big chunk of your paycheck. Which makes sense, considering the average credit card APR (refresher: how much you’re paying to borrow the money) is 16.91%. Gulp. With rates like these, it can feel like your entire minimum payment goes toward nothing but interest. Your money will pack the biggest punch if you put it toward whichever balance has the highest interest rate. After all, it's the one that's costing you the most.

Beef up your emergency fund.

It's all in the name. An emergency fund is your ‘oh sh*t’ safety net to help with things like losing your job, a major bill from your mechanic, or emergency outfits for a long weekend trip (just kidding). The experts at John Hancock say that squirreling away three to six months' worth of take-home pay is the ultimate target. Want a shortcut? Hello, unexpected money. Meet a painless way to top off your emergency fund (or get it started).

Get invested. 

If you're in good shape debt-wise, and your emergency fund is pretty solid, it’s time to grow your extra cash over the long haul. We're talking about investing, and it's a pretty hands-off way to build your wealth. Here’s what it could look like: if you put $1,000 a year into a Roth IRA for the next 30 years, you'll have $101,000 waiting for you on the other side (assuming a reasonable 7% percent annual return rate). Prettty prettty good.

Your 401(k) is another place to funnel a surplus of cash, especially if your employer will match any portion of what you kick in. Yes, please.

Give yourself the VIP treatment (almost).

It's more than OK to spend part of a cash windfall on yourself. No...we’re not talking about adding *everything* to cart. Instead, do a careful audit of experiences you’ve been meaning to try or things that really make you happy.  Then, earmark a portion of your surprise earnings for exactly those things. 

How much you set aside depends on your financial situation, young Padawan. More if your debt and savings are looking good; less if you’ve got work to do. It’s all about balance. Because if you go too hard on tightening your budget, you’re bound to feel deprived...making you way more likely to bust your budget.


The best way to spend extra cash isn't always so clear. Connecting with a financial planner can help bring things into focus so you can put your earnings to work. John Hancock gets it and has tools to help you plan. All aboard the (extra) gravy train.

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