Budgeting off of gross or net pay?

So, I’m geeking out developing my Tiller spreadsheet. I’m relatively new to careful budgeting, so have a basic question: do most of you budget off of gross or net pay? And if you budget off of gross pay, how do you have it set up in Tiller?

Budgeting off of gross pay would undoubtedly give you the most complete picture, but it also seems to involve a regular reconciliation of any pre-pay deductions. So, first question : Is it worth the effort since most of those pre-pay deductions aren’t usually discretionary anyway?

And if it is worth it, how do people set it up? We never see pre-pay deductions in any account, so do you set up a manual account called something like “Gross Pay” in which you reconcile the additional gross pay and the pre-pay deductions.

Anyway, I figured there might be a bunch of budgeting nerds in here with thoughts on this, in general, and how best to manage it in Tiller. Thanks!

Here’s my take on part of your question: How To Track Your Paycheck Deductions In A Google Spreadsheet - Tiller (tillerhq.com)
The links in the article are broken, but you can find the suggested template in your Tiller Community Solutions add-on, and the documentation is here: Paycheck Deduction Transaction Generator.


Whoa. Magical. Thank you!

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For what my opinion is worth and have only been using Tiller for a month after 30+ years of Quicken - It seems that working off net is much simpler. At the end of the day your net check is what you have to spend.

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This is my option also. I do have a separate spreadsheet that I use to track my paycheck deductions as they usually change a couple of times a year due to health plan increases and hopefully merit increase! I then link this to my net income for each month for budget purposes. Also have a tax calculation sheet that helps me know what my refund will be. Might have to look into the above noted Paycheck Deduction Transaction Generator

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Thanks. I set up the Paycheck Deduction Transaction Generator (one for me; one for my wife), and it really is quite smooth. Still deciding whether I’ll stick with it because the most annoying part about it might be having to bug my wife to see her paystub every two weeks. :wink:

I use the solution that @jpfieber developed and linked above (great solution by the way!), but I set it up differently than his documentation. I feel it’s easier to budget off of net pay, like @mike.lemm1 mentioned, but I also want to capture those deductions from my gross pay for a dashboard that I plan to start working on soon.

With my method, the gross pay and all income deductions will be hidden from all Tiller core dashboards, leaving only the positive net pay amount for all expense purposes. Then the dashboard I plan to develop will display the gross pay, income deductions, and net pay transactions, along with some calculations and graphs to give a little insight into the data. Not fully sure how it’s going to finally look or function, though, as I’m only in the brainstorming stages on this solution.

If this interest you, here’s how I set up everything:

  • I created a manual account that I set to be hidden from all reports that the gross pay and all deductions will flow into.
    • It’s kind of a ghost account that will not show up on any reports other than the one I’m going to develop.
  • I then created two separate transfer categories for net and gross pay, Income - Gross Pay and Income - Net Pay.
    • I set the gross pay category to be hidden just like the account is above, excluding it from reporting.
  • I then set up another category for Income - Gross Deductions that is also hidden.

I also have both a Transfer In and Transfer Out category that are set to hidden. I use these to tag any transactions that are essentially money moving between my accounts (when I pay a credit card, I tag the negative transaction with Transfer Out and the positive transaction on the credit card account side with Transfer In)

In the Paycheck Deductions Generator solution, I:

  • Set the account above as the account to be used in the generated transactions
  • Set the category for the gross pay transaction to Income - Gross Pay
  • Set the category for the net pay to Transfer Out
  • Set the category for the deductions to Income - Gross Deductions

Then, I categorize the net pay transaction that flowed into Tiller from my bank account as Income - Net Pay.

Now the journey for this money better reflects what happened in real life: my gross pay comes into the account above, the deductions are applied to it, then it’s transferred out of that account and transferred into my bank account.

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This is an interesting way to set it up, and I appreciate having only the net income remaining to budget. I’m eager to see the dashboard you develop to make use of this data lurking in the background. Thanks for the workflow!