Before you read this post go check out this comment to one of my previous posts. In it, Don talks about how they planned out their house purchase based on his current salary with no raises factred in. This got me to thinking about how many people rely on extra income when they plan big purchases or their budgets. If you plan with the extras included you’re setting yourself up for failure. What if none of that comes through?
I’m sure a lot of people, before the economic downturn, purchased their home thinking they were going to get overtime forever or were guaranteed a raise. Then the downturned happened and businesses stopped overtime and cut out raises. What are these people to do now?
I never budget with any extras in mind like overtime or extra paychecks. I base my budget on the bare minimum that I would receive each month. Any extra is just a plus that can go into savings.
I’ll give you an example of why I don’t include extras. A couple of months ago, before Beth (my girlfriend) got a new job, it was supposed to be her month to get an extra paycheck because she gets paid every 2 weeks. What ended up happening is her hours were cut. This caused that extra paycheck to be about 1/3 of what it was supposed to be if we had planned for it.
If it was in our budget we would have been in deep trouble because we would have counted our chickens before they hatch.
So here’s a little checklist of what not to do:
- Don’t include any extra income in your budget (ex. overtime, bonuses, extra checks)
- Don’t plan any big event around bonuses
- Don’t plan a big purchase around income that might not always be there.
- Don’t count your chickens before they hatch
I’ll just leave you with a quote said by Clark Griswold in Christmas Vacation after his bonus didn’t come through:
Hey! If any of you are looking for any last-minute gift ideas for me, I have one. I’d like Frank Shirley, my boss, right here tonight. I want him brought from his happy holiday slumber over there on Melody Lane with all the other rich people and I want him brought right here, with a big ribbon on his head, and I want to look him straight in the eye and I want to tell him what a cheap, lying, no-good, rotten, four-flushing, low-life, snake-licking, dirt-eating, inbred, overstuffed, ignorant, blood-sucking, dog-kissing, brainless, dickless, hopeless, heartless, fat-ass, bug-eyed, stiff-legged, spotty-lipped, worm-headed sack of monkey shit he is! Hallelujah! Holy shit! Where’s the Tylenol?
Have you ever had a time when you planned something with extra money that never came through?