Income

Sitting at your kitchen table surrounded by stacks of bills and receipts can leave you feeling out of touch and overwhelmed. Especially when you suspect that your checkbook is mocking you. You’ve been meaning to balance your account, but first you need to update the register, and before you can do that you need to track down the last two checks your spouse wrote, and, frankly, you’d rather gargle with glass than start that conversation. The good news: you can structure your money so you never have to go down that road again.

Before you shred your check register or call the bank for your current balance, and start writing checks until you reach said balance, let’s look at some tools that can help you identify your money patterns. (By the way, the time-tested system of writing checks until your balance is gone fails dismally as soon as your babysitter cashes the four weeks of checks she had in her wallet.)

The first pattern you want to establish is based on your income. Are you paid monthly? On the 1st and 15th of each month? Every two weeks? Every Friday? Variably? Do you have various sources of income? These can be significant; nearly 20 percent of Americans’ incomes are derived outside of regular wages/salaries. How often do you receive money from other sources?

Checklist: Income

The funds available to you each month may reflect some of these sources. Do you receive:

• wages/salary?
• monthly child support?
• student loans?
• rental income?
• disability income?
• Cash from a legal settlement?
• income from side jobs?
• veteran’s benefits?
• unemployment?
• worker’s compensation?
• Social Security?
• food stamps?
• dividends or interest?

Sources of Income

The Bureau of Labor Statistics breaks down the average sources of income for American households:

1. Wages/Salaries 81%
2. Social Security, Private & Government Retirement 10%
3. Self-Employment 5%
4. Interest, Dividends, Rental/Property Income 2%
5. Regular Contributions for Support 1%
6. Public Assistance, SSI, Food Stamps 1%

Sources of Income (before taxes). Bureau of Labor Statistics, 2008. Consumer Expenditure Survey Table 4.

Money Tool: Monthly Income Tracker

The Income Tracker below illustrates the income patterns of a family with two earners. As a school teacher, Cameron earns $1,500 on the 1st and 15th of each month and tutors on weekends for $200/month; his wife Angela is paid weekly.

Income Not To Count

Don’t become dependent on phantom windfalls. As you’re counting your money, be careful not to include variable, unreliable income, such as:

• Year-end bonuses
• Gains on investments
• Tax refunds

Use the blank Income Tracker below to track and calculate your family’s monthly income cycle. Using net income is best, since it reflects funds available to you after taxes are accounted for.

Income Tracker

	1st Week 1	Week 2	15th Week 3	Week 4	Monthly Total
Earner A
Job #1
Job #2
Earner B
Job #1
Job #2
Weekly Totals