Variable Income

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1

Hi - I tried searching for variable income, lumpy income, but I didn’t see anything.

I am going through a divorce and talking about the payments I will make to my ex. We have agreed to a monthly amount my ex will get, which will be paid 2x per month. The challenge is that I am paid 26 times a year and for a number of months I sort of would get what is left over after I have given my ex the support we agreed to. In some months the amount I receive would be less than we agreed to while in other months it would be more due to the pay period stuff. The average for the year would be the correct amount. So in certain months my income will be lower than my expenses and in others it will be higher than my expenses. I am using the saving budget so I know the income will roll over. Do people have thoughts on how best to handle this? I could just let the tool do its thing and roll over, but for a number of months the optics would look pretty bad. Income lower than budgeted, expenses higher than income…etc…Appreciate the feedback.

Thanks

Jared

2

If you’re concerned about intra-month timing effects, have you looked at the new Monthly Budget Calendar template that @Edward just published?

3

Thanks Randy. I did look at that and not sure its what I am looking for. I don’t think I need a daily look. Here is an example of my challenge.

January - Income: 5,500 / Expenses: 7,700
February - Income: 6,000 / Expenses: 7,700
March - Income: 6,200 / Expenses: 7,700
April - Income: 13,100 / Expenses: 7,700

For this period the income and expenses match, but as you can see there are some months that are below the average income for the period and my budget would show a shortfall for income from Jan-March and my expenses would be higher than income. Over the whole period though things would balance out. Hopefully that helps.

Jared

4

I see what you are talking about.
This is the allowing-things-to-even-out-over-time magic that the Savings Budget performs.

6

I think so long as you have enough in the bank to cover expenses even though you income won’t cover all your expenses in any given month then knowing that things will even out later with the savings budget would be okay!