How to Budget Variable Income So You Can Spend Freely, Save for Big Goals, and Invest | Multi-Six-Figure Family Case Study | 567

0:00Want to pay off debt but don't know where to start? Stop making random extra payments and hoping for the best. Let's build a debt payoff strategy that actually works. Join us Thursday, May 28th for our Debt Payoff Workshop so you'll know what you owe so you can pick your debt payoff method and you can start getting out of debt. We'll help you organize your debt, understand your balances, interest rates, and minimum payments, and help you choose what to pay first. We'll cover all three payoff methods, including the snowball, avalanche, and minimum payments, and we'll also tell you what to know before applying for debt consolidation.

0:32No shame, no finance bro nonsense, just your next right step. Grab your spot at budgetbesties.com forward slash debt workshop. We are bringing you a case study of a client who went through coaching with us and we just want to talk about where they were at, what they accomplished and everything that they did to get there. We think that these conversations can really help you because you can maybe see yourself in their circumstances and you can get little, you can glean little action items that you could take possibly to help you get out of debt or start saving money or figure out your finances.

1:03Do you make good money but have nothing to show for it? Are you tired of living paycheck to paycheck? Do you have big dreams for your financial future? Do you want to get debt-free but you don't want to live on beans and rice? When you don't want to give up those pumpkin spice lattes? If you don't already know how to budget or if you're using credit cards to get through the money. If you want to seem like you have your finances all together or you're not on the same page with your spouse when it comes to finances. We know what you're doing probably isn't working, but guess what? You're in the right place.

1:32We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey. We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money. In this podcast, we'll share with you everything we know plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on a conversation.

2:02We can help you no matter where you're at, whether you're the single mom who's never had$500 in their savings account or the millionaire who's paid off four real estate workers. And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time. This is the Financial Coaching for Women podcast. so let's dive in and i want to say that these kids were so cute or these kids this couple was so cute they had two kids they had two they were young parents and they were so much fun they were if i could have drawn out how i would be as a young person i probably could have picked them they were so adorable they were lovely and but they were making money and spending it so fast because a large part of that is because they made really good money but it was so random how much he would get paid that they just they didn't have a system at all and and it was just it was so messy even though he was in finance and he was very smart and very but he was in investments so it's very different yeah we actually have a lot of people that come to us who work with investments their brain works very differently in that part they're very smart very well educated but as far as the everyday money management part they're like i just need some help and so he his income was about 15 and nope he was 100 and he was 100 commission it's just we needed 1500 okay i'll say the 100 commission part and then we can talk about the holding account yeah so he was 100 commission that is how he got paid can you imagine so when we tell people about our automatic budget system that is easy and you can set it up consistently and they're like i can't do that my income is variable we're like yeah but we trust me when we say you can make it consistent So this is a situation where it was 100 % commission, guys, and also bonuses.

3:46So not just was his pay commission. He also got bonuses, quarterly bonuses on top of that. So like Shana said, money was everywhere, but it was going out as fast as it was coming in. Yeah, and they didn't have a rhyme or reason of what was happening. They just know that they wanted to be in the black. No red. Yeah, and so great. And they had actually, I think they did have a credit card, but we paid it off right at the beginning because they had the money. And that's a lot of times a lot of you, it's not that you don't make good money. It's not that you don't have the money. You just don't really know what's going on with money.

4:14And this circumstance was me where he was 100 % on commission. But either way, we have that situation happen a lot. And the other thing where they were starting is because everything was coming and going out of one account, they were not seeing eye to eye. The way that they spent money was different. And neither one of them. Different. Neither one of them. Right. But they weren't like, neither one of them was free from the, I don't want to say guilt, but like, they both were spenders. Sure. Just in different ways. And so that would cause a little bit of strife with their conversations about money.

4:45Really? And I see myself a lot in this. Maybe he would be like, gosh, you went to Target again. And she's like, oh, but look at your golf bill. You know what I mean? And what we want to do is everybody do what you want. Whatever is your version of bougie, we want to make sure we can afford that. And you can't afford that. But let's just look at it on paper. Let's see it as a team. Yeah. And I want to talk about their goals because they had fun goals. Okay. So they really wanted to achieve this level of clarity with their finances. and this automation part that we talk about so much. Okay, they really wanted a simple budget and they wanted to stay debt free.

5:15Shana said earlier, they had one debt that they paid off really quickly, but they wanted to make sure that they did not go back into debt. And they wanted to save for fun things, big, exciting plans, like golf memberships and travel and all the kids' activities, their children's future weddings, car purchases, all of that. We've had clients where they come in and all the things that could happen. I remember I had a client where she was leaving the army, She got pregnant. They were moving all at the same time. In the same summer. I'm like, okay, let's go. And she had an Amex that required you to pay off the balance all at once, which is, yeah, so much.

5:46But it's like with them, they had all the things that they wanted to do. Literally, they wanted to put in a pool. Then they wanted to buy a yearly golf membership, which I found out it's not cheap. No. It's not cheap. And they had all of these huge things that they wanted to do. And I'm like, okay, we can't. And I did look at their budget. I'm like, you can afford it. We're just going to figure this out. So that was part of it is we know we have all this money, but this is what we want to do. and they're not small goals. So they did want to do that. They were, he was so cute. He wanted to be able to retire so he could coach football.

6:14And she, I can't remember what she, they were just the sweetest. I love you. Didn't she make her bed, her bread from scratch, right? Yes. She felt guilty about buying a bread maker or something or no, the wheat berries. Yeah. The wheat berries. Yeah. Yeah. And they just wanted to be like, they were planning to be the best grandparents ever already. And their kids were like barely in school. It was so sweet. Yeah. I love that. And the financial legacy part, they wanted to leave a legacy behind to their family. Like Shayna said, they're planning not only for their kids, but their future grandkids because they saw the vision.

6:43They saw what was possible and they wanted to be able to achieve that. So I think that's awesome that they started young knowing that by the time they do retire, that they're going to be able to be good stewards of their finances. Yeah. And they already tithed, but they wanted to be able to give more. That was part of their goals too. Let's see. So they didn't start with a lot of debt. So a lot of times when we do these case studies, like that's the big wah. Whoa, wow. They paid$30 ,000 off in debt. No, they had zero debt, and then they had zero debt. That's what happened. While they had money, they started with zero savings buckets and zero dollars in the savings buckets.

7:15And then by the time they graduated, they had set aside$56 ,000 in their savings buckets, split up, dispersed into everything. And we can talk about that. And also invested$35 ,000 while we were in coaching into specific investments because they knew they could. He was investing here and there because he wanted maybe a little bit here and there, but now he knew I could invest this amount because I have everything else covered for the entire year. I know my income for the monthly little stuff that we have to pay for is covered. Now I know I can put this entire. And that was just one. We'll talk about that.

7:49That was just one quarterly bonus. He funded everything with his quarterly bonus. We made sure everything was good. And then he knew every other quarterly bonus, he could completely 100 % invest all of it. Okay. So a couple of things I have to say about that. But the one thing is if you notice, she said they didn't have debt. Okay. Not everyone's journey is to pay off debt. And even if you have debt, some people's journey are like, listen, I know I have debt, but I really want to focus on the savings buckets or the other parts, vacations. And that's fine. We like to say the average client pays off about$50 ,000 in debt and or saves while they're in coaching.

8:20This is the and or saves part. Okay. So debt wasn't their issue, but they did not have anything in savings because Shana said the money was coming in. The money was going out. It was all over the place. It wasn't organized. It didn't have a system. But by working with Shana, they were able to organize their savings package. She laid out exactly the ones that they needed while they were coaching together. So it was home maintenance, personal care, Christmas and birthday gifts, pet care, vehicle, medical. Each of their childs had their own. And then they had annual bills. And then they had travel.

8:49And then they had kids everything. Well, kids were young. So that's what you call it, right? Just all the things. So they had all of those ready to go, being able to fund, like Shana said. And the other part of this that I wanted to talk about is that they cannot fund their savings buckets monthly. Okay? They could not, with everything they had going on, all their expenses throughout the month, which is wonderful. They're able to live their life and fund their spending the way that they want. With them doing that, they can't fund their savings buckets monthly. So what do they do? They use their commissions or his quarterly bonuses, excuse me, to be able to do that.

9:20So it's a different take on the savings buckets monthly situation, but it still took care of the problem. Yeah. Yeah. And so just real quick. So while they were doing all of this, they were able to set everything automated, which was huge because he thought because his income was so quote unquote inconsistent and all over the place, he thought he wouldn't be able to do that. But everything was automated from him paying himself monthly to his bills on getting paid to their savings or their spending amounts. They called them slush funds. That's what they called it. And I was like, okay, whatever.

9:54So all of that was automated. So that's huge for them is they wanted – that's what their number one goal was. And then I will say all of this, all of the accomplishments we just listed were also happening while they built a pool, they did landscaping, they had different – their dog – like they had big dog problems. They got a dog, but then I think they also had to have surgery. Like all these things, I was like, let's add that to the budget while we're doing all this other stuff. So anyway, long story short is they were able to accomplish all of that. And again, it wasn't like this cookie cutter, easy, breezy, nothing's happening in real life while I pay off, while I put all of this money in savings and I set this automation of my budget up.

10:31All of the messiness was still happening and they still were able to do that. So what little tangible step-by-step things did they do to accomplish this thing? Yeah. These things. Like Vanessa said, one of the things that they had to do is set up these savings buckets and figure out how to fund them quarterly. So they realized when we finally did their budget, Vanessa, that they spend about$17 ,000 a month. That's not actually that crazy. There's no debt payments and no savings buckets, so maybe that's a little bit more bougie because of that. But between what they're spending, they spent about$6 ,000 a month between groceries, their slush funds, as he called it, the kids' stuff, and then gas.

11:11And everything else was bills, and those bills were not cheap. I just wanted you to know. But that's not a bad thing. so they were able to look at everything make a plan and set it in a place so i will say because his income was all over the place we actually shana built his budget backwards which was we did all the expenses first and then decided how much he needed to pull from his holding account so when you get paid like this we recommend you having a holding account where it's all your money gets stuffed into and you pay quote unquote pay yourself a consistent amount each month to be able to make all this work so they built their budget backwards and shana figured out the exact amount of money that they needed to bring in to the personal budget monthly to make everything work.

11:47Yeah. And actually, that did change a little bit over the course of the six months because we started off at 15. I remember distinctly. I remember. And then we had to, I was like, okay, that's fine. We can do that. But we're going to have to change this amount that you're paying yourself, which to Vanessa's point, all the money he makes goes into the income. And then only$15 ,000 in the beginning, then$17 ,000 was transferred on the first of each month to his bills account, which then funded or set up the whole system that we teach. And that's it. And more was paid over there. He knew for six months how much he needed to have in there.

12:18If he got above that number, he would move that over to his account to invest with. So anyway, so that was set up. One thing that they did is because they were in this situation, and this is one thing you can do to save money, if you can get ahead a little bit, is they moved as many subscriptions to annual as possible because then you end up saving money in the cost. And so they were able to do that, which was really also important for their budget because we ran out of lines. We only have so many lines. We ran out of lines. So I was like, okay, let's get that annual bill line going over there so that we can have some more lines in your regular budget.

12:49But like Shanna said, if you guys can do that, if you can get a little bit of money to be able to go ahead and pay for that subscription annually, there's usually a discount. My husband and I just did it for his DJ subscription. Yes, girl. Don't worry about that. Oh, yeah. My husband used to DJ in college. It's fine. So he started picking that back up again. It's going to be his new career. I'm here for it. I'm talking to Shana yesterday and there's techno music in the background. You go like in the woofer. Yeah. But it was 60 % off if you paid annually. That was a no brainer. No brainer. Absolutely.

13:18And here's my debit card. And you're going to spend it anyway. So don't get yourself in this brain thing where I don't have the money for that. Yeah. And speaking of which, they also figured out all their annual costs, which we want all of you to do. But this was particularly important because they couldn't pay as because they were and His monthly commissions really did end up being, give or take, around$15 ,000 or so. I don't remember. Or like his monthly, how much commissions he would get. And so that kind of was like a paycheck, but you couldn't count on it. And because they were spending all of that, anything, literally anything else that would come up, they don't have the money to pay for.

13:51So he really had to do the research, and you might be this way too, to figure out the other things that are going to come that aren't month specific, they're like annual specific, to be able to figure out how to pay for those. because you might be in that situation too, where because of my debt, because of my savings buckets or some of these savings buckets, because of my income, I know that this bonus or that bonus or my tax return or whatever, summer season when I can get a side job or whatever, I know that's the only time that I'll be able to save money to put towards these things. It's really important to figure that out, list it all out and figure out how much you cost annually.

14:22Yeah. And so when we talk about annual stuff, guys, especially bills, like if you can't, or if your brain can't wrapped around getting all of your annual costs, just do your annual bills. And these are things like auto insurance, your prime, your HOA dues. I have a client who has a country club membership, right? All of these big expenses, because Shana said, you may not know what you have coming up, but when they come and there's an$800 HOA bill due and you're like stuck, you want to be able to have cash to pay for that. Yeah. And so they didn't actually end up having a home savings bucket. I don't think they put all of their, everything that was like that into their annual bills.

14:58And along with what Vanessa said, they also had pest control, which is one that comes, they had weed control. And then HOA, like she said, Norton LifeLock. That's another, just, just think of those. We have the one that Dave says, what is it called? You know what I'm talking about? Yes, I do. Okay. Anyway, but that's a, that's something, yeah, something for that. Maybe you have Amazon, you used to have Amazon. No, you used to have Pandora. Now you have Spotify, like a cool person. Anyway, iCloud. I just think that life insurance, your CPA. Yeah. setting aside money for your life or for your CPA because you're going to have to pay them.

15:30And then maybe you have registration for your cards. Those are all the things that we're thinking, what we're talking about when we're talking about annual bills. Anyways, if you can just get those started there, because again, just because it's annual doesn't make it any less important. It's still a bill. So it's still as important as a monthly bill. And we need to make sure we figure out those costs. And so here's one of the big things that they did. And this is so funny because it's really important for everybody. But I feel like for my bougie folks, it's even more so important. you need to set a spending budget and it's not because you can't afford it baby do whatever i don't we don't care how much your spending budget is but you need to set one so what we needed to do for them is separate their spending from their bills just like anybody else but for them putting a thousand dollars each month into their each slush fund that they called it was the first step to get them to figure out and stop the hemorrhaging the bleeding of all the spending and then they then we just individually could figure out what are we actually spending money on?

16:25Is this enough money? Do we need to add to it? What do we need to remove from the bills account? Like the separation was super key. And that goes for all of your different spending accounts is to set those up. Again, it's not restriction. We're not saying no, we're not saying you can't, we're not saying you don't have the money for it. We're saying that any millionaire got there on purpose, very strategically planned. And you want to have some type of guardrails around that. So that way the rest of your budget works. You want to be able to pay off all the debt, save all the money, have money for bills, your monthly bills, be able to buy gas and groceries with peace of mind.

16:55And you also want to be able to have cash for yourself. You work really hard for the money that you make. You should be able to spend money how you want to, but also just set some type of limit around it each month. All right, budget besties, it's time for some real talk. You don't need another budget. You need a budget system. Our simplified budget system is what you've been looking for. It's going to allow you to be bougie on a budget. You'll be able to easily set up a system that runs automatically and shows you exactly where your money is going. And it's going to give you permission to spend.

17:27Everybody loves that. It's straightforward, pretty, and packed with walkthrough videos that break down the exact methods we use with our clients to get out of debt, set up a bills account, separate spending, build savings buckets, and end the paycheck to paycheck feel. If you're new to budgeting, this is the perfect way to jump in. And if you're already a budget nerd like us, you're about to meet your new obsession. This is the upgrade to your finances that you need. Now back to today's show. One thing that they did do is they started off, I think, with a $2 ,500 grocery budget. And we ended up upping that to$3 ,000.

18:05I know, right? What could I do? I think it's cute because a lot of people will try. The first thing is it's what they can control. yeah i'm gonna slash my grocery budget and we're like all right but sure baby let's try and then it doesn't work doesn't work well and i think that was what was really that's why it was so fun to work with them it's like we are all realistic here if you've been spending who knows what we're not going to put it down to a thousand dollars and i feel like that's going to work but they did end up realizing they needed to go about five hundred dollars more and then also something that interestingly enough happened i remember i mentioned they don't have the home account is she would be using her spending money to get stuff for the home and no no but instead of creating he didn't he's like i don't want another he even got a little he was really excited and he got a little burnt out because they have 11 they had 11 so he's i don't want another savings bucket just give her 200 i was like hey i was like can you go talk that's that her like hobby lobby yeah target or whatever if they need a new rug or whatever she and she consistently month after month we were noticing that's where her money because it becomes a competition sometimes you guys like hey i still have spending money you don't it's because i'm spending on me and the kids what are you doing with your life anyway and maybe that was part of it too like they didn't want another account they felt like they could handle just this many accounts so anyway we did end up upping her budget a little bit more and then the other thing i was going to say about medical for them that was interesting you saw their grocery budget that wasn't because they're eating out that's because they super healthy like they're probably the most healthy high quality food and they also are on supplements prescriptions he goes to the doctor often and it's not cheap i don't know what's happening they have labs they had all of this stuff and so some of it was monthly that was coming out and some of it was and he just put it all in the medical so that they knew because remember how many bills were coming out of the bills account okay guys so we really needed some separation to make it clear and easier for them to understand so anyway so they were they were putting all those different kind of medical things into the medical and i've had people do that like they'll make it medical slash supplements or whatever wellness like medical wellness I love it I think it's a great idea my girlfriend she said last year was her wellness year and she said everything she got for Christmas or for birthday was all like the aura range she got ordered labs for herself she ordered all this kind of stuff and it was really like she's in her 40s she said it was just a really great time for her to just reassess where she's at medically and I love having an account just for all of that so you know how much money you can spend and it's revolving.

20:29We've talked about this. Savings buckets, it's a revolving door. Money is going in, money is going out. As long as you know how much you're going to spend roughly in a year and you put that money in there monthly or quarterly, however you're funding it, you'll always have the cash available. Yeah. And I want to add that golfing is expensive. So I golf. It's a bougie sport and this is a bougie podcast. Yeah. Country club slash golf. I don't think it was just golfing. I'm not sure exactly what's going on. I'm not at that level, but I know I've seen in movies like when they're doing, they go golfing to do business deals and investing.

21:02And I feel like that's what was happening maybe. Anyway, he had to pay$1 ,200 a month for his golf. And I thought, oh, it's a lot. And then I realized that's with him paying an annual upfront fee. Oh my goodness. So I just love that for us. So anyway, that was one of the things he funded with the quarterly bonus is to pay whatever that fee went in. That way his monthly payment could be as low as$1 ,100 or something. I don't remember exactly, but I just realized this is not cheap, but it's probably why he makes so much money. I don't know. I don't know how it works. That's just really. It's also, I think like I said, clients and other stuff.

21:35Oh, he does it. Gotcha. Gotcha. Yeah. I do love that. My husband just went golfing the other day and it was$70 for a round of golf and he's a babe. I don't remember it being that much. Baby things have changed. Welcome to every single thing we pay. We could all say that about it, right? So if you divide the 1200, I'm not just saying it's $70 for him. You have to go golfing 17 times a month to make that worth it. So just think about that as far as well. It's not like our golf course. No, I'm just, I know it's probably way better, way better. I'm just saying if you guys have stuff like this, make sure you're getting the use out of it, right?

22:07Regardless of what you're paying for, are you paying, are you using for what you're paying for? And I think that's a really great tip to just throw in there. And I'm sure he is, obviously it's his favorite thing ever. He ever does, right? Maybe I think so. And And I think she likes it because she can go do whatever and he can go do whatever. Everybody's happy. They also had to figure out pet insurance. So we used to say, Vanessa and I used to say and be pretty staunch on it. Secure in our belief. We would rather you save up a certain amount and not pay pet insurance every month. And then we have this surgery that this dog had, I remember.

22:44And they got a puppy. And I was like, okay, it's now, no, you can just pay this insurance. insurance and that was but the deal is you have to make sure you have good insurance because if you're paying this monthly fee but they don't cover this kind of condition or they don't they only pay 10 of surgery or whatever that's where you really need to do your research because there's no point paying someone 400 a month or however much this pet insurance fee is if as vanessa said you're not going to actually get it back if you're not going to be the kind of person that's going to pay for this emergency service surgery or something that maybe you just put them down or whatever, that's something to consider too.

23:20But also if the insurance isn't going to pay for the things that you're foreseeing, you're going to have to pay for them with debt anyway, then that's not the plan. Yeah. So again, what are you paying for? If you have pet insurance, you need to figure that out. And if it's working for you and if it's the right insurance, keep it. If it's not, find the one that works. Or maybe you need to not have pet insurance for your specific situation, again, it's different for everyone, and you just need to have a pet emergency fund on your own as a savings bucket, then do that. So with the income holding account, what they needed to do was come up with the number that when it hit that, so every time he would get a bonus, he knows that can immediately be applied.

23:58We just need to decide where it's going to go. But if, let's say, his monthly commission started stacking up to where it was more, he had a threshold of whatever it was, and then he knew if it got above that amount, then he could put anything over that. He can move it to his account where he figures out where he wants to invest it to. And so you're going to want that. If you have an income holding account too, you're going to want that number figured out that if it goes over that, which would be a good problem to have, then that's the number you're looking at and then you can move over any other as profit or whatever you want it, whatever you want to call it to do something else with the money because you know that that number you've created is like a six month sort of emergency fund or whatever you want to call it that can pay you for six months.

24:36And I think that's really important And for all of you who have variable income or inconsistent income and all that, I'm pretty sure they chose the six months because they know that within that six months period, regardless if it's inconsistent, six months is a good average to know this is how much I need personally. And my income isn't going to be that inconsistent for six months. It may be one month, maybe two months, maybe three months. But overall, that six month period is going to be leveled out. And so lawn care companies, different things like that. I even have spas that are inconsistent based on the time of year with Christmas and different things.