Money Matters
buckyfan30
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Budgeting with unknown income
Hi all. This is my first post here, but I like to check out this board as much as I can.
I'm wondering if anyone else here deals with not knowing their (or their SO's) income and how you budget.
For us, Dh is the breadwinner. He gets paid by the job and not hourly. Based on the time of year we have a pretty good idea of what to expect him to bring home...but its always a guess. I have a set wage and I also earn commission. Other than a guess based on history, we have no idea how each month is going to go.
Any tips and tricks or suggestions?
Re: Budgeting with unknown income
I would pull his past monthly after tax income data as far back as possible (maybe three years max) and add up all the months and divide by the number of total months (find an average).
Then, I'd use that as a starting point and SUBTRACT from that average amount a few hundred dollars or whatever you think best to come up with a more conservative monthly income amount for him.
Budget conservatively with his income so you can lessen surprises.
For example, if his average income over 3 years is $2,250 per month (after taxes), than I might say he earns $2,000 or even $1,800 each month.
On months he makes more than the budgeted amount, decide if those extra dollars go to ADDITIONAL debt payments or to ADDITIONAL savings. On months he makes less than the budgeted amount, then you may have to draw from your savings to cover your normal expenses.
Edited to add: If there is a huge swing in income amounts each month, then I might try to do as much of your budgeting off of your income as possible and use his income for the non-essentials (TV, eating out, clothing, fun stuff, etc.). Factor all teh necessary and basic items off of your income (housing, basic food, gas, utilities, debt payments, savings...).
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. SeussAccording to Dave Ramsey, you will want to keep extra cash on hand to tide you through the slow period of your husband's work. Then when he gets paid you replenish the savings account.
I can't think of a better way to do this. You would also want to keep your monthly expenses as constant as possible.
This is us as well. Any month's that we have extra cash, we put it in savings for the dry months
Thanks all for your responses. The Dave Ramsey - Hills and Valleys sounds like something I should take a look at. That is essentially how things are going now, so that makes me feel a bit more confident in how we are planning. We're looking to buy a house next spring so I get discouraged when I have to take money out of savings during the valley times.
A couple of you mentioned using my pay for the essentials and counting on DH's for the extras. I WISH we could do this, it would make me feel a lot less anxious. My pay (not including commission) only covers rent and daycare for the month.