Your variable income may come from working for yourself, changing hours, sales commissions, tips, or bonuses. The most complicated budgeting comes with those who have variable incomes, though it doesn’t take away from the need to budget and it is certainly doable. Pro-tip: If you get paid ether weekly or every other week, live off your “regular” 48 or 24 paychecks and put the money from your “extra” paychecks into a savings account. If you simply calculated your annual income, and divided it by 12, the numbers wouldn’t always come out even so you need to make sure you are tracking your income each month. But if you are paid weekly or every two weeks, your monthly income can get confusing because it will change some months. If you get paid either once or twice a month, determining your monthly income is relatively easy. This is especially important in the case of an employer match. Often the most important will be health insurance (where available) and also 401(k) savings. Pro-tip: It’s important to learn which employer-sponsored programs you should be participating in. Just look for the bottom number, or your take home pay, after taxes, insurance, 401(k), or any other items that are deducted from your paycheck. If you have a predictable, steady paycheck that doesn’t change each month that is pretty easy to do. The first number to go in your monthly budget is your income. But, when hard decisions about spending money arise, you will be more successful if you can reflect on the WHY that is important to you before you begin putting numbers in a spreadsheet. You don’t have to select a why that encompasses your whole life’s ambitions from the start. Do you want to retire on a lake? Send the kids to a certain school? Do you want debt freedom? A certain vacation? A retirement savings or lifestyle goal?
You should reflect on your values together. If you and your partner know what you’re budgeting for, you’re much more likely to succeed. That is why you need to start with your why. For many, simply paying bills isn’t a great reason to begin a budget, it is just something in life that we all do. Most people don’t like to do something that can be tricky if they have little reason.
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