I'm not going to judge you for not being actively involved in the big-picture finances; that's the same in our house (with a gender swap). But if your DH has handled savings/investing in the path, and you handle household/variable/discretionary spending (either with a strict budget or by just keeping an eye on things), I'm not sure why you think you're expected to be responsible for calculating and setting aside taxes under the new system? My guess based on the way you've been managing things is he's already putting estimated taxes aside and leaving you with what's available. That's what I would do.

Anonymous wrote:

Anonymous wrote:Here’s what we do, OP. We use DH’s regular pay checks for our general day-to-day and month-to-month expenses. We keep a separate checking account for tax payments, and immediately transfer all of his quarterly distributions there to cover the quarterly tax payments. When we get his year-end distributions, they go into the tax account as well at first. Once our annual taxes are done and we have the quarterly estimates, we leave a small cushion in the tax account for the following year’s quarterly payments, move all of the extra back into our main account, and then make a plan for the remainder of the past year’s distributions. This is when we make annual contributions to the kids’ college funds, earmark money transferred to savings for vacations for the coming year, major home projects, and any other significant outlays we anticipate outside of our usual expenses for the coming year. The remainder goes into investments.

Oh that’s great! Do you do 529 contributions monthly or annually?

Annually, from the remainder of the year-end distributions after we pay taxes. It’s actually pretty helpful from an organizational standpoint because right after we pay our taxes, we make the 529 contributions and all of our planned annual charitable donations, save all of those records to next year’s tax file, and then can forget about all of those tasks for the rest of the tax year.

Anonymous wrote:Here’s what we do, OP. We use DH’s regular pay checks for our general day-to-day and month-to-month expenses. We keep a separate checking account for tax payments, and immediately transfer all of his quarterly distributions there to cover the quarterly tax payments. When we get his year-end distributions, they go into the tax account as well at first. Once our annual taxes are done and we have the quarterly estimates, we leave a small cushion in the tax account for the following year’s quarterly payments, move all of the extra back into our main account, and then make a plan for the remainder of the past year’s distributions. This is when we make annual contributions to the kids’ college funds, earmark money transferred to savings for vacations for the coming year, major home projects, and any other significant outlays we anticipate outside of our usual expenses for the coming year. The remainder goes into investments.

Oh that’s great! Do you do 529 contributions monthly or annually?

Here’s what we do, OP. We use DH’s regular pay checks for our general day-to-day and month-to-month expenses. We keep a separate checking account for tax payments, and immediately transfer all of his quarterly distributions there to cover the quarterly tax payments. When we get his year-end distributions, they go into the tax account as well at first. Once our annual taxes are done and we have the quarterly estimates, we leave a small cushion in the tax account for the following year’s quarterly payments, move all of the extra back into our main account, and then make a plan for the remainder of the past year’s distributions. This is when we make annual contributions to the kids’ college funds, earmark money transferred to savings for vacations for the coming year, major home projects, and any other significant outlays we anticipate outside of our usual expenses for the coming year. The remainder goes into investments.

Anonymous wrote:

Anonymous wrote:OP didn't say she doesn't work, you dolts. The pay structure of law partners is whacky and takes some conservative adjusting to make sure you don't screw up. Many first year partners struggle with this.

OP, we talked to our more senior partners to get a guestimate of what the final tax situation was likely to look like after all the various states' taxes were accounted for, etc., and set a little more than that aside in a separate line item account so we wouldn't "see" it and be tempted to spend it. Also after making partner we started having our taxes done by someone who knows law firm taxes, and she was able to advise us on all that from then on.

Good point. What do you do OP?

Who cares what she does, or doesn’t do? Her question is valid, and interesting. You’re trying to insult her intelligence. If she works then she gets a pass, but if she’s a SAHM then she’s an idiot?
Disgusting.

Anonymous wrote:OP didn't say she doesn't work, you dolts. The pay structure of law partners is whacky and takes some conservative adjusting to make sure you don't screw up. Many first year partners struggle with this.

OP, we talked to our more senior partners to get a guestimate of what the final tax situation was likely to look like after all the various states' taxes were accounted for, etc., and set a little more than that aside in a separate line item account so we wouldn't "see" it and be tempted to spend it. Also after making partner we started having our taxes done by someone who knows law firm taxes, and she was able to advise us on all that from then on.

So did your tax person also do a little bit of financial advising? We are definitely getting a tax person but it seems like they don’t provide as much financial advice as I’d like and the financial advisors we have spoken to didn’t seem like a good fit (we don’t want a life insurance salesman and we don’t have millions in wealth that the really good financial advisors need you to have). If we could get somebody who does big law taxes and provides a little financial advice on the side that would be great.

Anonymous wrote:Wow these early replies are harsh. OP, I could have written your post years ago, and I *still* don’t understand exactly how much money we have (and DH understands it even less than I do). We pay taxes in like six countries and quarterly estimates in several states (and federally). And YOU are responsible for it, since nothing is withheld. It is absolutely confusing.

All I know is, ultimately, it’s A LOT of money. Just try to keep your spending at around the same level for a couple years, at which point you’ll have a good cushion of money that you know is earmarked for taxes / capital call / etc.

Thank you for your response! Good to hear that it’s been okay. I feel like I’m not a particularly big spender but we do have home projects we are doing (that are sadly necessary because of water drainage problems; they can’t wait until things are more stable) and I’m a little worried about cash flow. We would of course be fine if I overspent but I’d feel so embarrassed to have to take out a line or credit or something.

Anonymous wrote:OP didn't say she doesn't work, you dolts. The pay structure of law partners is whacky and takes some conservative adjusting to make sure you don't screw up. Many first year partners struggle with this.

OP, we talked to our more senior partners to get a guestimate of what the final tax situation was likely to look like after all the various states' taxes were accounted for, etc., and set a little more than that aside in a separate line item account so we wouldn't "see" it and be tempted to spend it. Also after making partner we started having our taxes done by someone who knows law firm taxes, and she was able to advise us on all that from then on.

Good point. What do you do OP?

Budgeting is for the poors. Don’t bother. Just don’t do anything crazy like buying a boat.

OP didn't say she doesn't work, you dolts. The pay structure of law partners is whacky and takes some conservative adjusting to make sure you don't screw up. Many first year partners struggle with this.

OP, we talked to our more senior partners to get a guestimate of what the final tax situation was likely to look like after all the various states' taxes were accounted for, etc., and set a little more than that aside in a separate line item account so we wouldn't "see" it and be tempted to spend it. Also after making partner we started having our taxes done by someone who knows law firm taxes, and she was able to advise us on all that from then on.

^ sorry, a cushion of money you know is NOT earmarked for those things

Wow these early replies are harsh. OP, I could have written your post years ago, and I *still* don’t understand exactly how much money we have (and DH understands it even less than I do). We pay taxes in like six countries and quarterly estimates in several states (and federally). And YOU are responsible for it, since nothing is withheld. It is absolutely confusing.

All I know is, ultimately, it’s A LOT of money. Just try to keep your spending at around the same level for a couple years, at which point you’ll have a good cushion of money that you know is earmarked for taxes / capital call / etc.

Anonymous wrote:It’s easy: just don’t increase your burn rate. Save and invest.

That’s a good idea but I am not even sure what my burn rate is. I could go back and look to see how much I spent on certain things in years past compared to now, but that is hard (for me, like I said i suck at this) and it doesn’t account for recent inflation. Plus we are spending on things now that we didn’t before like therapy for one of our kids and more activities for the other. And I admit that DH did get a huge raise (I can’t calculate exactly how much but maybe 50K) so that’s a mental barrier to avoiding lifestyle creep.

But yeah I probably should just go compare a month from last year with a month from this year.

It’s easy: just don’t increase your burn rate. Save and invest.

And I always kind of sucked at budgeting anyway since his salary reached maybe 300K, so now it’s even worse. I just have no idea how much money we *really* have. I can’t even understand what he is actually going to make for the year.

In times past I just kept a general eye on mint, pulled back on variable expenses if it looked like our balance was low or if there was an unexpected expense like a new HVAC system.

DH keeps track of all the savings and investments and I know our financial situation is fine, but I feel a little out of control knowing that the balance in our bank account doesn’t reflect how much money we really have because of the highly complicated pay structure and quarterly taxes.

I guess we could get a new checking account and each month into that we could put the money we *know* we have to spend, or I could just try to keep a general eye on our expenses to be sure I’m not spending above our means, or I could try to do a deep dive and a good amount of math to see exactly how much we have.

Did anyone else have a problem with this transition?