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The Money Tamer

QUESTION: Patty in Cincinnati is having issues with budgeting. Her husband is in construction, so their income is varied. She doesn’t know how to plan for this variable income. Dave explains how to handle an irregular income.

ANSWER: I suggest you make a list of what you would put into a budget, which you already have—you’ve got that list—and it’s what we need to spend on food. It’s what our lights and water are going to be this month. It’s what our rent or house payment is this month. Make a list of everything you need to spend money on or want to spend money on with a dollar amount beside it. Then you look at that list with your husband and you say, “If you have a horrible month and we only make enough to do one thing, what would we do?” And you put a “1” beside that. I’ll help you with that. That one’s food. If you only make enough to do one more thing past food—we can’t do anything on this list but two things—what’s the second thing we’re going to do? I’ll help you with that. It’s utilities—lights and water. You keep asking that question, and the next time you ask it, it’ll be pay your rent or your house payment.

We’ve got food, shelter, clothing, transportation. You take care of basic necessities first at a base level—nothing fancy. Then you keep going down the list from there and say, “Well, if we make enough to do one more thing, what would we do?” You keep putting a number beside it. Then you rewrite that list in order of number one through whatever—the most important thing to the least important thing.

You could do the budget every week if you wanted to, but certainly at the first of the month, what you’re going to do is make that list down the page. When the money comes in, you’re going to go as far down the page as you can go. If you paid the house payment, you can just mark through that one and pick up next week where the other one left off. You might have to break your food budget into four different items on there or start every week with food before you do anything else or something like that, but the idea being that you have a prioritized spending plan, and as much money as you make, you go down the page as far as the money goes until it runs out.

Sharon and I lived on that plan forever—for a decade—until we got our income stabilized to where we had enough income coming in every month no matter what to pay our bills. What happens is you could go down the page and the money runs out before the list runs out. It needs to run out. The list needs to be longer than the money. No matter what you make, every dollar has a name.

It’s fine that you haven’t saved anything the last four months because his income’s struggling right now. That’s what that means. If you didn’t save anything because you went on a cruise, then we’ve got a problem. You’ve got your priorities wrong. But if you didn’t save anything because you kept food on the table and lights and water were paid and you kept the rent paid, then you shouldn’t save anything. You should take care of necessities first. Then you’ll get to the other things.

I think what you need to do more than anything is be more organized and prioritized like I’m talking about, and you were attempting to do that with the Gazelle Budget. Congratulations for attempting, but I’m with you. That’ll drive you nuts the way you were trying to do it. I agree with you.

I’m going to send you a copy of the book The Total Money Makeover. Remember, it’s got the budget forms in the back of the book, and one of the forms is the irregular income planning form. It’ll walk you through again what we just talked about in case you forget what we just covered. It’ll get you set up and get you going.

You’ve got to do two things for this to work. He’s got to be involved and agree with you on the spending and go along with it or have a vote in it—that kind of thing. The second thing is you’ve got to get a little bit more organized and very purposeful. No money is spent—period—except what’s on that paper. If you left something off, you’ve got to rewrite the paper and prioritize it again. You have to start from scratch to do that. The irregular income planning sheet in the budget forms. For those of you that have been through Financial Peace University, you’ve got the sheets. Those of you that have a Total Money Makeover or Financial Peace book, you’ve got the budgeting forms. They’re always in the back of those books, and you’re set up to win with that. You’re set up to be able to put together a game plan.

Let me just tell you money will leave and go to other people if you don’t manage it. Money leaves those who do not manage it, and it goes to someone else. You do not get to keep money if you don’t manage it. It leaves. It moves away from people who don’t manage it and toward people who do. The budget is the way you manage it. It’s the whip and the chair. It’s the money tamer. You’re making the money behave.

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