How to budget for variable paychecks?

llamafilm

I tried to setup a spending plan, but one challenge is that my paycheck changes throughout the year. The main reason for this is that social security deductions stop after reaching the cap. Does Simplifi have a way to handle this?

DannyB

It's not really an issue, your income will simply increase for those months. Is there any particular issue you are running into?

Wedo778

Is your income essentially one of two values, $X from Jan-Sept and $Y from Oct-Dec? (or whenever you hit the limit) You could set up multiple paycheck series each for the specific dates so that each one is accurate.

But if your income is all over the place because you work on commission for example, I'm not sure what can be done. If even you don't know what your Sept 15th paycheck is going to be today how can Simplifi? All it can do is adjust the plan once that check comes in.

llamafilm

@DannyB if I create a spending plan based on the lower income, then it will look like I’m over spending each month.

DannyB

When do you hit the SSA limit? We would usually hit the limit in Sept. Our spending though was based on net pay with SSA withheld.

Perhaps you can reevaluate you current spending through the 50-30-20 lens: 50% needs; 30% wants; 20% savings.

I'm not sure what you can do except rethink your spending during the months you have SSA withheld.

Another possibility going forward would be that when SSA withholding stops. put that "extra" income into savings to be distributed over the months SSA is withheld in the next year. But I wouldn't think this to be ideal.

I would try to adjust my spending to match my net with SSA withheld and then put that "extra" income into a retirement fund. If you don't have an IRA or ROTH IRA, set one up and use that extra income to fund it.

Or if you have some future purchase or experience you want to make or have, save toward that.