Variable income
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Anonymous
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Variable paychecks (amount and/or date)
Do any of you have this too? Any specific strategies for planning your month? This isn’t new to us. We’ve had this going since 2015. Both for me and DH. *note, if you don’t relate to this post, head on out. I posted similarly last year, and gave more details for our finances and it got way off track. Thanks. |
Anonymous
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For example, for us DH gets paid early in the month. (In September it was 9/8). He makes the most by far. His pay is calculated monthly.
For me, I work a few various jobs and side jobs so we can be flexible. I sometimes make a lot, I sometimes take breaks. My paychecks came in on 9/4, 9/11, 9/15, 9/18, and 9/30 with most of the $ amount in the last half of the month. We plan for each month on the 1st, then again after his check. My checks are not part of the plan, they’re like a bonus for us. Not bc that’s how we see it… but because our needs are taken care of through his checks, and mine come in randomly / amounts related to seasonality, and we just save all of it anyway. |
Anonymous
| We only include our base salaries in any budgeting / fixed costs (like mortgage car nanny etc). Any variable comp like RSUs, commissions, etc go into savings and we pull a small amount for bougie vacations (we love to travel). Pros of this is we save a ton. Cons are we definitely live WAY below our “on paper” comp because the variable comp can be a lot. |
Anonymous
This is good advice -OP I find it is hard to apply bc DH’s is sort of 100% commission. By contract it’s base+commission, but in 4 years (his whole employment at this particular place) he has never relied on base. The base is so low/barely livable. The next best number would be lowest check in the last 12 months. Say this is 10k.. the issue is he **usually** (eleven times out of twelve) exceeds it by 2-3k. So even thinking about it as 10k, is not going to be the reality. It’s a figure somewhere between (again, hypothetical) 10k-13k. Plus mine are all over. I can be between $0 and $2k+. I know I’m only stating problems, I have a solution but want someone to talk me through it. I’ll post below. |
Anonymous
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By barely livable, do you mean needs or wants or both? Or only big expenses?
Mine has set dates but ranges $0-$XXXX. Husband is every 2 weeks and different amounts with a minimum that's about half of the maximum. Every 2 weeks means 2 or 3 paychecks per month. Mortgage and a few other things go out of the account that gets his paycheck automatically and I pay the rest out of the account that gets my checks. I keep a savings account and transfer to it when extra has built up and back into checking when I need it. It's basically like a sinking fund but not tracked granularly, but I know the buffer amount I like it to have. I like to pay bills manually, though. You can automate it by putting paychecks into savings and setting up automatic transfers to "pay" yourself. Then you'd need some seed money in there to cover multiple low months in a row. I also just kind of know which months are expensive. One matches to a month I usually make a lot of money and one doesn't, but I don't worry about it because annually we're okay. |
Anonymous
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This used to be us since 2011 and only recently changed this year.
I use YNAB and they have a lot of resources on the topic. If you're interested I can post. |
Anonymous
Sure! Op here. We use EveryDollar and have for a decade I think. We haven’t missed a month. I love that I drag and drop our transactions. We have our specific categories for each kid, etc. you can see if there is unallocated money or if my planning is over our income. It’s working. But I can’t help feeling like we’re always waiting until the 30th (on my last paycheck) to make savings or student loan payoff decision. Or that we can’t plan based on DH’s check until the 6th or so. Today is the 2nd, so yes this is my mindset for the first week of every month. 
The one change I think about making is theoretically taking the October 8th check and putting it “on November.” And essentially putting all October checks on November. So we start out the month with clarity. I can’t figure out how I would do this exactly. I’m sure we’d get confused somewhere. |
Anonymous
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Save ahead a month, so whatever you need for the month, have fully in your account before the month starts.
Have a separate savings account that has enough to balance between the lowest month you could possibly have and what you need to live on. So if 10k is the low month and you need 15k- have an account that has enough to cover 5k as often as you think it will happen. In our case, we get paid biweekly and also quarterly. I started by saving a full year of quarterly payouts so that I knew exactly how much we had to spend for the next year. It was tough at first, but now that we’re ahead, I don’t care how much the quarterly payments are. |
Anonymous
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I use YNAB, and they have tips for how to plan for variable income.
https://support.ynab.com/en_us/using-ynab-with-variable-income-an-overview-BynJaHZ09 I think the most important thing to do is to get ahead one or even two months in your budget. The more irregular your income is, the further ahead you need to be. And you need to have a very accurate record of your variable expenses each month, and try to keep them as consistent as possible. So, even if November is a great month for you and you get a large bonus or commission, you don't see any of that money as a windfall. It just goes into your budget and gets applied to future month's categories. |
Anonymous
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Here's one YNAB idea for variable income.
Make up a bare bones budget for each month. In months when you bring in more than you need, put the extra into a category called "making up for a light month". Pull money from that category in months when you don't meet your bare bones minimum income. https://www.reddit.com/r/ynab/comments/16o9b3b/using_ybab_with_variable_income |
Anonymous
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And one more YNAB article:
https://www.ynab.com/blog/slaying-the-variable-income-dragon |
Anonymous
19:55 here. What bothers you about not knowing savings or student loan amounts in advance? Logistics or that you're not putting as much as you think you should towards those goals? I do not have student loans but for 529 and when I've had car loans, I track the balances or amortization tables vs. my goals and contribute more or pay off extra when I see the buffer building up. The unpredictable timing doesn't bother me but requires general discipline of not spending every dollar I have but I'd do that anyway. It's hard to tell if you're bothered because you're not doing something you think you should be doing or you're bothered by a specific outcome. I guess my advice is basically embrace the variability and don't try to fit into a clean monthly box that isn't your reality. |
Anonymous
| Also can you predict how much your checks will before they come? I do keep a spreadsheet with hours worked/net pay and then interpolate so I can predict or even sometimes purposely work more if a big expense is coming up. Are your breaks by choice or only by the nature of the seasonality of your various projects? Mine's kind of a mix, but I can somewhat adjust my hours if I'm wanting more money. |
Anonymous
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We are in a similar position where all of my DH’s income is hourly (consulting) no base salary. Basically, our expenses are more consistent than our income so I have all of our paychecks go into a HYSA and then I pay us our budgeted expenses into the checking account once a month (on auto) with a little buffer.
Seems to be working well right now. You have to have a fair amount in you HYSA for this to work depending on how variable your income actually is. |
Anonymous
| I saw this advice to do use the lowest of the past 3 years as a way to budget and I found it helpful. |