Budgeting: Can't Seem To Calculate Our Income Correctly

[shane2943]

Hello everyone! I hope you all had a wonderful Christmas and New Years!

My wife and I have been on Dave Ramsey's plan for a short while now and we've been budgeting each month for the past year. As any startup budget goes, it changes month to month to better suite us as we learn and find better ways to do it. We've got the receipt counting and bill recording down to the science. We can calculate our out-go fine from month to month. The problem: our income.

My wife gets paid by-monthly and is salary. On the 15th and the last day and we can predict her income because it does not change. I, on the other hand, get paid every 2 weeks and am hourly so not only do my checks fall on different times of the month (sometimes 3 times), but the amount I get paid fluctuates as well.

We can't seem to find a reliable, non-confusing method of calculating my income month to month! Sometimes I'll get paid 4 days before the beginning of the next month and it's so confusing!

This is what we're doing now when we budget at the beginning of each month:
-Add up my checks for the previous month
-If I have a check that "overflows" into the next month, we subtract all purchases from that check forward to the end of the month and then use what's left over to start the next month off.

Problem is, we end up getting so confused and never seem to get it added up correctly so our planning ahead for the next month is always off. We use a self created spreadsheet to track everything but the spreadsheet is merely a blank form that we write on. It's a guide. I took a screen shot of the income section of our budget, but I can't post pics until I have 15 posts. If anyone wants to critique our spreadsheet, please let me know and I will PM you the pic of it.

I'm not sure if it's how we have the spreadsheet layed out, or how our math is, but we always end up doing this wrong.

Can anyone lend some insight? I know there has to be plenty of you that, like me, get paid by-weekly and are hourly and are doing this right.

Thank you in advance!!!

[frugalwarrior2]

Hey shane,
Your post was a little confusing but lets see if we can help at least a bit. You post that your wife is paid bi-monthly. That means every other month. So you said the 15th and the 30th so I think you meant 2x a month.

I would say get a piece of paper and list what you pay and put each amt you pay per month. There should be fixed costs and variable cost right?
Get a new sheet of paper. For the 15th put the amt your wife makes plus 1/2 of the lowest amt you make per month. For the 30/31 or second 2 weeks period do the same.
I am going to do this real simple. Don't think I think your a little touched or something.LOL
Now according to dates due. Start substracting your bills. From now on any extra YOU make should go into an acct. as a cushion for the times when you makes the lowest. This is in addition to a $1000. Baby Emergency Fund for unexpected events.
This is what people w/ flucuating incomes must do. Additionally, people who are in jobs like teachers,construction workers and commision sales.KWIM?

ok-the goal is to move your budget from crisis (w/ late charges) to now (paying things as they come) to anticipatory (money put in accts. for ins.,crisis, and later retirement) Much less stress,more smiling.

Now remember, this needs to be honed. You will forget things at first. 1 time a year bills (wifes life ins.),(dogs vet blood test) practice makes perfect.

You should buy a 1 1/2 " binder w/ plastic sheets and write it out. It's boring and old fashioned but it works if you do it. Every month I write it down I go look at the year before and remember things I forgot. It clicks along well. I write an anticipatory budget and at the end of the month I write it again w/ actual expences.
I would suggest you make as many cost fixed as possible.
We have our mortgage. But I am on buget plan for gas and elelctric. Our water is fixed because we are on well and pay a fixed sewer bill every 3 months. We pay my DH life ins. monthly and cable is the same (we won't order movies off the tv).

Another thing I suggest is a credit union. Much less fees and overdraft protection. Get an online acct. you can veiw daily. It is harder for ATM w/d to get away from you then. Plus fewer suprises. By the time your statement comes its just a reveiw.

When I first started out I made a master list of any expense I could think of too. Whether it was hair cuts,birthdays,xmas,flea pills or what ever. put it at the front of your folder. Be patient. It's a learning process. People here are great. Ask me to explain anything you don't get. Hope this helps a little.

Would you like to PM me. I am no financial expert but have handles the budget for 25 years.??

[never2late]

You post that your wife is paid bi-monthly. That means every other month. So you said the 15th and the 30th so I think you meant 2x a month.

Bimonthly and biweekly are funny words.... They can mean every other month/week or twice per month/week. I believe the OP is saying his wife gets paid twice a month, as opposed to every 2 weeks (which over the course of the year means that there are 2 months where you get an extra paycheck or 3 checks that month).

[ladytoysdream]

Way I understand the post...
wife gets paid 2x a month...he gets paid every other week.
So 10 months he gets 2 checks, and 2 months he gets 3.

My husband gets paid every other week. I base the budget on 2 paychecks a month. The other 2 paychecks a year, just help build the cushion for misc bills through the year, in our checking account.
I have a written notebook, when each bill is due. Write the check and log date of payment into notebook for each bill as it gets paid. Set up the notebook one month in advance.
I know which bill is coming out of which paycheck each month. We have 2 automatic ones that come out that are 13 days apart. So because the paycheck is every 14 days, I have to keep the balance big enough to cover the second automatic payment at all times.

[shane2943]

Bimonthly and biweekly are funny words.... They can mean every other month/week or twice per month/week. I believe the OP is saying his wife gets paid twice a month, as opposed to every 2 weeks (which over the course of the year means that there are 2 months where you get an extra paycheck or 3 checks that month).

Exactly. Sorry for my fuzzy explanation, guys and gals!

I haven't had time to read over y'alls posts yet, but will reply when I do get a chance!

Thank you!!!

[Greebo]

Guys, first, lets get the language right.

Bi-weekly - every 2 weeks. Bi-monthly - every 2 months. And so forth.

SEMI-weekly - every 1/2 week or twice a week. Semi-monthly - twice a month. And so forth.

Ok that's out of the way.

I am paid bi-weekly, like you. Ceashels is paid weekly.

Since every year is 52 weeks, and 52 divides neatly by 4, we have been using a 4 week budget, not a monthly budget. That means we have 13 "months" each year, and each month is exactly 4 weeks long. In 2010, my first paycheck is dated 1/1/2010. Thus the budget we just wrote up was for 1/1 to 1/28.

By doing a 4 week budget, we avoid that whole mess with 2 or 3 checks each month. We look at all the bills coming due within the budgeted period, and also of course the annual allocations, but we divide our annual allocations by 13 (13 months) and allocate 1/13th of the needed amount every 4 weeks. We also note the due date for the monthly bills.

So to give you an idea what ours looks like:
Budget: 1/1 - 1/28
Income $1918
Mortgage: $1139/2 due 1st and 15th
Gas: $405 due 5th
Vonage: $54 due 17th
Groceries: $320

And so forth...

Then we do our allocations:
Payday 1/1 - $1294.5
Mortgage: $569.50 / $725.00
Gas: $405 / $420
Vonage: $0 /320
Groceries: $320 / $0

Obviously those are made up numbers but that's how it works out. We prioritize the budget per DR - 4 walls first, then baby steps.

Hope that helps - it does mean one more budget a year, but it makes the math work.

[shane2943]

Hey shane,
Your post was a little confusing but lets see if we can help at least a bit. You post that your wife is paid bi-monthly. That means every other month. So you said the 15th and the 30th so I think you meant 2x a month.

I would say get a piece of paper and list what you pay and put each amt you pay per month. There should be fixed costs and variable cost right?
Get a new sheet of paper. For the 15th put the amt your wife makes plus 1/2 of the lowest amt you make per month. For the 30/31 or second 2 weeks period do the same.
I am going to do this real simple. Don't think I think your a little touched or something.LOL
Now according to dates due. Start substracting your bills. From now on any extra YOU make should go into an acct. as a cushion for the times when you makes the lowest. This is in addition to a $1000. Baby Emergency Fund for unexpected events.
This is what people w/ flucuating incomes must do. Additionally, people who are in jobs like teachers,construction workers and commision sales.KWIM?

ok-the goal is to move your budget from crisis (w/ late charges) to now (paying things as they come) to anticipatory (money put in accts. for ins.,crisis, and later retirement) Much less stress,more smiling.

Now remember, this needs to be honed. You will forget things at first. 1 time a year bills (wifes life ins.),(dogs vet blood test) practice makes perfect.

You should buy a 1 1/2 " binder w/ plastic sheets and write it out. It's boring and old fashioned but it works if you do it. Every month I write it down I go look at the year before and remember things I forgot. It clicks along well. I write an anticipatory budget and at the end of the month I write it again w/ actual expences.
I would suggest you make as many cost fixed as possible.
We have our mortgage. But I am on buget plan for gas and elelctric. Our water is fixed because we are on well and pay a fixed sewer bill every 3 months. We pay my DH life ins. monthly and cable is the same (we won't order movies off the tv).

Another thing I suggest is a credit union. Much less fees and overdraft protection. Get an online acct. you can veiw daily. It is harder for ATM w/d to get away from you then. Plus fewer suprises. By the time your statement comes its just a reveiw.

When I first started out I made a master list of any expense I could think of too. Whether it was hair cuts,birthdays,xmas,flea pills or what ever. put it at the front of your folder. Be patient. It's a learning process. People here are great. Ask me to explain anything you don't get. Hope this helps a little.

Would you like to PM me. I am no financial expert but have handles the budget for 25 years.??

I do see what you're saying and it makes a lot of sense! I do make a guaranteed 80 hours and sometimes more than that but no less so that would be my minimum per pay period. It's the timing of the whole thing that throws us for a loop! Sometimes I get paid 3 days before the beginning of the next month and sometimes I get paid 2 days after. I like my wife's structured two pay days a month at the exact same amount. Makes things MUCH easier.

I will PM you in a couple minutes. Thank you!

Way I understand the post...
wife gets paid 2x a month...he gets paid every other week.
So 10 months he gets 2 checks, and 2 months he gets 3.

My husband gets paid every other week. I base the budget on 2 paychecks a month. The other 2 paychecks a year, just help build the cushion for misc bills through the year, in our checking account.
I have a written notebook, when each bill is due. Write the check and log date of payment into notebook for each bill as it gets paid. Set up the notebook one month in advance.
I know which bill is coming out of which paycheck each month. We have 2 automatic ones that come out that are 13 days apart. So because the paycheck is every 14 days, I have to keep the balance big enough to cover the second automatic payment at all times.

I see what you're saying. Good ideas there!

Thanks!

Guys, first, lets get the language right.

Bi-weekly - every 2 weeks. Bi-monthly - every 2 months. And so forth.

SEMI-weekly - every 1/2 week or twice a week. Semi-monthly - twice a month. And so forth.

Ok that's out of the way.

I am paid bi-weekly, like you. Ceashels is paid weekly.

Since every year is 52 weeks, and 52 divides neatly by 4, we have been using a 4 week budget, not a monthly budget. That means we have 13 "months" each year, and each month is exactly 4 weeks long. In 2010, my first paycheck is dated 1/1/2010. Thus the budget we just wrote up was for 1/1 to 1/28.

By doing a 4 week budget, we avoid that whole mess with 2 or 3 checks each month. We look at all the bills coming due within the budgeted period, and also of course the annual allocations, but we divide our annual allocations by 13 (13 months) and allocate 1/13th of the needed amount every 4 weeks. We also note the due date for the monthly bills.

So to give you an idea what ours looks like:
Budget: 1/1 - 1/28
Income $1918
Mortgage: $1139/2 due 1st and 15th
Gas: $405 due 5th
Vonage: $54 due 17th
Groceries: $320

And so forth...

Then we do our allocations:
Payday 1/1 - $1294.5
Mortgage: $569.50 / $725.00
Gas: $405 / $420
Vonage: $0 /320
Groceries: $320 / $0

Obviously those are made up numbers but that's how it works out. We prioritize the budget per DR - 4 walls first, then baby steps.

Hope that helps - it does mean one more budget a year, but it makes the math work.

My language was definitely wrong in my first post. I apologize again for the confusion.

Not sure if the 13 month budget would work for us since my paycheck is the only one that is bi-weekly and my wife's is semi-monthly (twice a month: 15th and last day).

Good food for thought though. Thank you!!!

[Greebo]

Not sure if the 13 month budget would work for us since my paycheck is the only one that is bi-weekly and my wife's is semi-monthly (twice a month: 15th and last day).

Good food for thought though. Thank you!!!

Yeah, having one on a set day of the week and another on set days of the month does screw with the timing.

And you have all those extra variables you mentioned - variable hours, overtime pay.

I'm just guessing here, but it sounds like overall, you're not in any kind of desperate situation. If you've got your expense planning down to clockwork, then would I be right in guessing that you've got your spending under control and not a dollar leaves your house without you knowing when where and why?

If so, then what you've got with the inability to predict income is not much of a problem, right? It really comes down to the X category - that being the Baby Step you're in. After all, if you don't know your exact income, you don't know how much to put into the Emergency Fund, or the Debt Snowball, or to your mortgage, right?

Because while Dave talks about having a Zero based budget - what that means is you allocate every dollar. It doesn't mean you HAVE to know what every dollar is going to be every week. You know you're going to make AT LEAST, oh, call it $1,000. Your planned expenses then MUST come in at or under $1,000, or you have a problem. When the expenses equal $1,000 - no snowball, no increase to the EF, no extra to the mortgage. When the expenses come in UNDER $1,000 - well whatever is left - that's the X factor.

So when your income turns out to actually be $1,212.85 because you put in a bunch of overtime, when you planned your expenses for $1,000 or less - you're sitting pretty, right? You've got $212.85 that you put to the EF, or to debt repayment, or when you're in Baby Step 7, into, well, whatever you want!

You're doing this in excel - so my suggestion would be to set up TWO columns for your budget and for your income allocations. Expected - and Actual.

Do all the Expected planning ahead of time - whether you use the 4 week month 13x a year or the standard 12 month a year doesn't really matter. Fill out "expected" like you're doing now.

Then whenever you get paid, whenever you pay a bill, whenever you put money into the cash envelopes, go into the spreadsheet and update the ACTUAL columns. Put an actual amount in the budgeting and in the allocations, and fill out that column just like you did in the planning, only you'll be updating it frequently - on pay days most of all, but also when you do any online bill paying or check writing.

Then - when you've completed all of your planned allocations for a particular payday - when there's something left, THAT amount gets inserted into the Actual "Snowball (ef,debt,etc)" category.

The monthly budgeting - think of that as strategic planning. You're looking at the big picture and deciding in general what you have to do. But to really control your money there does need to be day-to-day budgeting. That's the TACTICAL work - that's small scale, "what do we do right this second to win" work.

I think overall you're doing a great job by the sound of it. You'll get this licked.

[shane2943]

So basically, we should budget for what my minimum pay would be each month, then back the extra if I make any more than that, correct? That makes sense!

We're not hurting financially at all right now. In fact, I'll be paying off our 2nd to last debt today!!! One more to go and it should be gone by March (hopefully...praying hard!!!)!

Budgeting for my minimum won't be hard to do since 80 hours is what I'm garaunteed each pay period and most of the time, that's where I'm at anyway. O/T is not all that common and when it does happen, it's just a few hours here and there.

Thanks a bunch, guys and gals!!!

[JoJoBean8]

My husband and I get paid twice a month. We are on opposite weeks so I make a monthly budget out that looks like this:

1/1 ( Dan's pay)
Health Insurance-500
Gas/electric-300 ( if this bill isn't due yet I put it into saving so I get some interest while I wait for the bill to come)
gas-50
food-100
savings-90

1/8 ( Jo's pay)
gas-20
food-40
savings-50
iou-50

1/15 ( dan's pay)
savings-90
food-100
gas-40
rent-450
cell-100
cable/internet/phone-155
water-50
Amaya's college-25

1/22
gas-20
food-40
iou-50
savings-40
medicine-40

It would normally end there but there is an extra week and it's my husband's pay so we will pay our car insurance, get gas, get food, and then put the rest into savings

[kimmy4433]

I am really no help, I am still trying to figure out mine. But my DH gets paid weekley and he is hourly with OT. Now he is a plumber and only gets paid for the job he does, not drive time and OT only hits after 40 hours in the week, even though some days he is out of the hous for 13 hours. His smallest check was around $250.00 and his largest was $1800.00 how do you budget that? Well I did a yearly average and it is around 500 a week. So I budget 400 a week or 1600 a month. Then any extra (because that is enough to cover the bills with my income) is going to be put to our debt snow ball.

[never2late]

My language was definitely wrong in my first post. I apologize again for the confusion.

No need to apologize - I knew what you meant! While there is some disagreement on it, Webster's does say that bimonthly means once every 2 months or twice in a month, but that for twice in a month, semimonthly is the preferred term. It has been my experience that which word people use tends to be a bit of a regional thing.

Good luck on your budgeting!

[NikoSan999]

Whoa!!! This is confusing. I've been paid on 15th and 30th before with spouse every week and I guess seeing it or reading it makes it sounds worse than it was.

[MomToTwoBoys]

DH and I also have different pay schedules. He gets paid every two weeks and is not salaried, so he gets paid hourly. I get my money twice a month: the 1st and the 20th. Even with those dates in stone, they may change based on statuatory holidays and bank holidays.

We had a really, really hard time setting up a budget with how much total income we had.

Here's how we solved it:

We went through the calendar year and made note of every two weeks that DH got paid. If he was getting paid on the 4th and the 18th, we'd use the money from the 18th to last us until he got paid two weeks after that. If the paychecks came towards the end of the month, we'd count that towards the next month. For example, if we got a check on the 28th of March, we'd use it for April's income. Usually if we got a check on the 28th of April, technically we also got one on the 14th and the 30th of March and the one from the 30th of March would be counted for April's income.

So our rule is that we would count any checks that fell closer to the first of the month as that month's income. If the check towards the end of the month extended into the next month, that check would be counted for the next month.

If we got a check on the 2nd and the 16th, we'd use the one for the 30th as income for the next month.

As far as amounts go, we'd take a look at how much DH's checks would be at the low end and base the budget from that. If DH made more than the low end, that would be part of our savings.

I hope that makes sense.

Hello everyone! I hope you all had a wonderful Christmas and New Years!

My wife and I have been on Dave Ramsey's plan for a short while now and we've been budgeting each month for the past year. As any startup budget goes, it changes month to month to better suite us as we learn and find better ways to do it. We've got the receipt counting and bill recording down to the science. We can calculate our out-go fine from month to month. The problem: our income.

My wife gets paid by-monthly and is salary. On the 15th and the last day and we can predict her income because it does not change. I, on the other hand, get paid every 2 weeks and am hourly so not only do my checks fall on different times of the month (sometimes 3 times), but the amount I get paid fluctuates as well.

We can't seem to find a reliable, non-confusing method of calculating my income month to month! Sometimes I'll get paid 4 days before the beginning of the next month and it's so confusing!

This is what we're doing now when we budget at the beginning of each month:
-Add up my checks for the previous month
-If I have a check that "overflows" into the next month, we subtract all purchases from that check forward to the end of the month and then use what's left over to start the next month off.

Problem is, we end up getting so confused and never seem to get it added up correctly so our planning ahead for the next month is always off. We use a self created spreadsheet to track everything but the spreadsheet is merely a blank form that we write on. It's a guide. I took a screen shot of the income section of our budget, but I can't post pics until I have 15 posts. If anyone wants to critique our spreadsheet, please let me know and I will PM you the pic of it.

I'm not sure if it's how we have the spreadsheet layed out, or how our math is, but we always end up doing this wrong.

Can anyone lend some insight? I know there has to be plenty of you that, like me, get paid by-weekly and are hourly and are doing this right.

Thank you in advance!!!

[shane2943]

DH and I also have different pay schedules. He gets paid every two weeks and is not salaried, so he gets paid hourly. I get my money twice a month: the 1st and the 20th. Even with those dates in stone, they may change based on statuatory holidays and bank holidays.

We had a really, really hard time setting up a budget with how much total income we had.

Here's how we solved it:

We went through the calendar year and made note of every two weeks that DH got paid. If he was getting paid on the 4th and the 18th, we'd use the money from the 18th to last us until he got paid two weeks after that. If the paychecks came towards the end of the month, we'd count that towards the next month. For example, if we got a check on the 28th of March, we'd use it for April's income. Usually if we got a check on the 28th of April, technically we also got one on the 14th and the 30th of March and the one from the 30th of March would be counted for April's income.

So our rule is that we would count any checks that fell closer to the first of the month as that month's income. If the check towards the end of the month extended into the next month, that check would be counted for the next month.

If we got a check on the 2nd and the 16th, we'd use the one for the 30th as income for the next month.

As far as amounts go, we'd take a look at how much DH's checks would be at the low end and base the budget from that. If DH made more than the low end, that would be part of our savings.

I hope that makes sense.

I totally forgot about this thread!

That's how we were doing it and it confused the heck out of us. We would spend 20 minutes just trying to figure out if my check that fell on the 28th would be for this month or next. God Bless y'all for making that work, cause we can't seem to make it work for us. Every one is different and there's no magical formula that works for everyone.

I think we might have something that does work though. We are going to calculate the budget based on my minimum 80 hour level and spend the money ahead of time in the predicted column of our budget. As are also going to add to that, the left over in the account (by using our online banking) at the beginning of the month. So if I get paid on the 28th, our left over amount will be pretty high for the next month, but I will still have two paychecks coming. We will still aim to keep the left over amount for the next month as high as possible.

We're gonna try this and see how it works!