Comments on: Smooth Our Irregular Income

By: phil

phil — Wed, 21 Nov 2007 15:43:26 +0000

My wife has always been paid monthly (once a month), and until late last year, I was paid bi-monthly (twice a month; the 15th and end). Now, she continues as she has, and I get paid bi-weekly (once every two weeks).

I had already had a savings schedule worked out for major areas of finance for our household. Since I’ve always had a “first of the month” and “middle of the month” periods for when bills got paid, it still works out, I simply have to mark for when the “first” or “middle” — my paychecks — actually hit our checking account and dispense accordingly.

For us, the “additional” two weeks that I provide allows us to be able to, say, squirrel away a respective car payment at the beginning and end of a given year for other necessities at the time, so it’s almost a forced “extra income” savings plan on top of everything else.

It always takes additional work to budget, but once you get a system worked out after a pay frequency change, it works really well.

By: MoneyNing

MoneyNing — Wed, 14 Nov 2007 00:44:26 +0000

I don’t think this is actually a problem unless you are living paycheck to paycheck.

Let’s say a couple is able to create a surplus most months of the year, then they will have a stash to draw upon when they pay bills etc etc. So whether they pay every 2 weeks or on the 15/30th shouldn’t matter since the money isn’t going straight from paycheck to bills.

By: Curtis

Curtis — Tue, 13 Nov 2007 19:26:24 +0000

We are just starting down the road of doing this as well. Though for a different reason. We are doing it to help curb spending altogether. I just blogged about it last week (http://realworldfinances.blogspot.com/2007/11/our-new-financial-structure.html)

By: GeekMan

GeekMan — Tue, 13 Nov 2007 18:23:55 +0000

Interesting post, and very relevant to my own situation. Now, I may be a tad dense, but for most freelancers, there is no option for direct depositing your checks. Also, you are usually paid on a per-project basis and only at the completion of the project. Of course, there are many instances where one is paid at several successfully completed stages of an ongoing project (every month, after a review of completed portions, or at some other predefined period of time/completion) but for the most part a freelance job lasts only a short time and a check is handed out 30-60 days AFTER completion. So it is quite possible for a freelancer to receive NO income at all for up to 3 months. And then they might receive 2 or 3 large checks all at the same time. I wonder how you would suggest someone in that situation should handle their finances to help smooth out the bumps?

For my own situation my wife and I treat my income as supplemental, even though I actually earn a bit more than she. Her checks are direct deposited into our eSavings and we pay our bills from that. When I get checks I deposit them and allocate the money to several different accounts based on our current needs. Some to our savings, some to our emergency fund, some to our checking account if needed, etc.

By: SavingDiva

SavingDiva — Tue, 13 Nov 2007 18:08:12 +0000

I deposit all of my “extra” income (from surveys, second jobs, etc) into a savings account. I don’t even have a chance to see it. I pretend like the money doesn’t exist, so it has really helped to beef up my savings!