Make Irregular Income? Have Regular Pay | Series 2.7

Voiceover Audio: 00:00:00

Welcome to the Enjoy More 30s: Family Finance

Voiceover Audio: 00:00:03

podcast, the only podcast dedicated to making life more

Voiceover Audio: 00:00:06

enjoyable for young families by hitting on the financial topics

Voiceover Audio: 00:00:10

that tend to weigh on us, stress us out and distract our focus

Voiceover Audio: 00:00:13

from simply enjoying life.

Joseph Okaly: 00:00:16

Hello, and welcome to Enjoy More 30s: Family

Joseph Okaly: 00:00:19

Finance. This is the seventh episode in the "Your Money

Joseph Okaly: 00:00:22

Multiplier" series, which is entitled "Make Irregular Income?

Joseph Okaly: 00:00:27

Have Regular Pay". This is actually an addition to what I

Joseph Okaly: 00:00:30

had planned to cover this season, but when I thought of

Joseph Okaly: 00:00:33

this topic, I was just really excited to share it. I feel like

Joseph Okaly: 00:00:36

it could really help a lot of people, that I just wanted to

Joseph Okaly: 00:00:39

make sure I fit it in now. If you're like a lot of people out

Joseph Okaly: 00:00:42

there, whether it be self-employed entrepreneur, an

Joseph Okaly: 00:00:46

individual in some kind of a sales profession, or you just

Joseph Okaly: 00:00:50

have a large part of your income that's bonus derived, we're

Joseph Okaly: 00:00:53

going to cover what you need to know when it comes to organizing

Joseph Okaly: 00:00:56

how your income flows. And what you can do to turn that into a

Joseph Okaly: 00:01:00

regularly occurring monthly pay for yourself.

Joseph Okaly: 00:01:04

Ants are wonderfully amazing and at the same time amazingly

Joseph Okaly: 00:01:08

irritating creatures. There is no other creature out there that

Joseph Okaly: 00:01:12

I have such a combination of respect and also disdain for.

Joseph Okaly: 00:01:17

Millions of these little worker ants are out everywhere all the

Joseph Okaly: 00:01:21

time gathering food, and they don't care if that foods in your

Joseph Okaly: 00:01:24

house, they don't care if it's at your picnic, they will keep

Joseph Okaly: 00:01:27

coming no matter how many of them you get rid of. Up in the

Joseph Okaly: 00:01:31

northeast, these little creatures store so much food

Joseph Okaly: 00:01:34

throughout the warmer season, that they're able to survive the

Joseph Okaly: 00:01:37

entire winter below ground. Now most people out there are

Joseph Okaly: 00:01:41

probably familiar with Aesop's Fable of The Grasshopper and the

Joseph Okaly: 00:01:45

Ant, which goes off of this kind of work ethic that the ants

Joseph Okaly: 00:01:49

have. So it's very well known, it's not just me. What the fable

Joseph Okaly: 00:01:53

doesn't cover, which is so impressive though, is how these

Joseph Okaly: 00:01:57

tiny creatures have, you know, this huge glut of food, yet

Joseph Okaly: 00:02:02

somehow know how to slowly distribute it out to themselves.

Joseph Okaly: 00:02:06

I'm sure if they could get monthly shoprite deliveries,

Joseph Okaly: 00:02:09

that'd make everything a lot easier, and they probably

Joseph Okaly: 00:02:11

wouldn't be such a pain during the warmer months taking all the

Joseph Okaly: 00:02:14

food.

Joseph Okaly: 00:02:15

So what you need to know is people with large fluctuating

Joseph Okaly: 00:02:19

incomes tend to have this same distribution problem to deal

Joseph Okaly: 00:02:23

with. But instead of food, it's money. And I am one of those

Joseph Okaly: 00:02:28

people, the way my personal income works. Almost all of my

Joseph Okaly: 00:02:32

income gets paid to me quarterly, as it is for most

Joseph Okaly: 00:02:35

people in my profession. This requires extra planning,

Joseph Okaly: 00:02:45

however, in managing my monthly income. My mortgage, cell phone

Joseph Okaly: 00:02:52

and everything else that you have, needs to be paid monthly.

Joseph Okaly: 00:02:56

So I have to spread income out over the whole quarter. How much

Joseph Okaly: 00:03:01

did I spend? How much did I save? How much do I have left

Joseph Okaly: 00:03:05

after the last quarter? All these questions become

Joseph Okaly: 00:03:08

problematic very quickly. In addition to that, there's much

Joseph Okaly: 00:03:12

more of a likelihood to spend whatever comes through the door.

Joseph Okaly: 00:03:16

You know, you go to a restaurant- if they gave you 10%

Joseph Okaly: 00:03:19

less on your plate, you'd probably still finish it you

Joseph Okaly: 00:03:22

know either way, 10% less or 1 % more. Whatever you have in fro

Joseph Okaly: 00:03:25

t of you, there's a higher chan e of consuming it. So money's t

Joseph Okaly: 00:03:28

e same way- make more, spend mo e is kind of an easy trap to fa

Joseph Okaly: 00:03:32

l int

Joseph Okaly: 00:03:33

What you can do, though, is convert your irregular income

Joseph Okaly: 00:03:37

into regular pay. And it's actually pretty simple to do. We

Joseph Okaly: 00:03:41

call it the bucketing approach to budgeting. First have all

Joseph Okaly: 00:03:46

your various forms of irregular income flow into one bank

Joseph Okaly: 00:03:51

account. So this is bucket one, and we call it the "all income

Joseph Okaly: 00:03:55

account" because all your income flows into it. So you have

Joseph Okaly: 00:04:00

bonuses, commissions, whatever they might be, they all flow

Joseph Okaly: 00:04:04

into this all income account- bucket one. Next, have this

Joseph Okaly: 00:04:09

account send a fixed amount every month to your checking or

Joseph Okaly: 00:04:14

whatever spending account that you have- this is bucket two.

Joseph Okaly: 00:04:18

You just systemized your income. So as an example, let's say you

Joseph Okaly: 00:04:23

received $35,000 this quarter. This would go into your all

Joseph Okaly: 00:04:27

income account- right, bucket one. If you need let's say

Joseph Okaly: 00:04:31

$10,000 a month for all your expenses, you have this push

Joseph Okaly: 00:04:35

over to your checking or spending account, bucket two,

Joseph Okaly: 00:04:38

automatically every month. So first of the month $10,000 comes

Joseph Okaly: 00:04:43

over, second month $10,000 comes over, first day of the third

Joseph Okaly: 00:04:47

month $10,000 comes over. So you now are systematizing your

Joseph Okaly: 00:04:51

income- you receive $10,000 every month. And now you also

Joseph Okaly: 00:04:56

know that you have an extra $5,000 that you can do something

Joseph Okaly: 00:04:59

with, right? Okay, I received $35,000 this quarter, I know

Joseph Okaly: 00:05:03

that my systematic, that I have set up to move over to my

Joseph Okaly: 00:05:07

spending account, is 10,000 every month. So 10,000 times

Joseph Okaly: 00:05:11

three is 30, I know that I still have an extra $5,000 from this

Joseph Okaly: 00:05:14

variable income that I received.

Joseph Okaly: 00:05:16

This works great for monthly amounts too. If I make $15,000

Joseph Okaly: 00:05:20

one month, then $7,000 next month, then $10,000 the one

Joseph Okaly: 00:05:25

after that. Again, you can always have this income,

Joseph Okaly: 00:05:28

whenever you receive it, go into this all income account- so that

Joseph Okaly: 00:05:33

first bucket. And then again, just carrying over from the

Joseph Okaly: 00:05:36

previous example, if there's that set $10,000 a month that's

Joseph Okaly: 00:05:39

delivered to me on the first of the month, or whatever date you

Joseph Okaly: 00:05:43

want, when you see that money then build up in your all income

Joseph Okaly: 00:05:46

account, you can siphon it off, add it to your investments,

Joseph Okaly: 00:05:50

spend it on a special project. And since you're paying yourself

Joseph Okaly: 00:05:53

this fixed amount, your spending doesn't change with your income,

Joseph Okaly: 00:05:57

a huge additional point.

Joseph Okaly: 00:05:57

You're essentially turning your elf into your own business s

Joseph Okaly: 00:06:01

ructure. So just stop or a second and think about a

Joseph Okaly: 00:06:04

y business out there. Ther is no company that earns exact

Joseph Okaly: 00:06:08

y the same every single month. So think of the company you

Joseph Okaly: 00:06:13

re working for right now. T ey don't bring in the same

Joseph Okaly: 00:06:16

xact amount of revenue every ingle month. Some months are a

Joseph Okaly: 00:06:19

ways better than others. But ny salaried employee gets p

Joseph Okaly: 00:06:23

id the same exact amount every onth. So the business is doing

Joseph Okaly: 00:06:27

the same thing. They have a ariable income that goes into th

Joseph Okaly: 00:06:31

s all income kind of account, eople get paid out every month

Joseph Okaly: 00:06:35

are fixed salaries, and the oney left in the account at t

Joseph Okaly: 00:06:38

e end is the additional profit So you're just rearranging

Joseph Okaly: 00:06:41

ourself to work how every busine s pretty much out there wo

Joseph Okaly: 00:06:45

ks, and how it makes sense for t em to handle this same exact s

Joseph Okaly: 00:06:48

tuation.

Joseph Okaly: 00:06:51

So as a recap of the episode today. First is to acknowledge

Joseph Okaly: 00:06:54

that irregular income is definitely more challenging of a

Joseph Okaly: 00:06:57

problem. The second is to set up your two buckets to handle it,

Joseph Okaly: 00:07:01

though. Your all income bucket, so bucket number one, to receive

Joseph Okaly: 00:07:05

all the various income. And then a checking or spending bucket,

Joseph Okaly: 00:07:09

so bucket number two, to receive a fixed amount every month that

Joseph Okaly: 00:07:13

matches what your monthly expenditures are. Third is to

Joseph Okaly: 00:07:17

calculate out how much you actually need to live on each

Joseph Okaly: 00:07:20

month, and set the transfer to occur automatically from one

Joseph Okaly: 00:07:23

account to the other. Lastly, make sure to look regularly

Joseph Okaly: 00:07:27

whether it's quarterly or annually, whatever works for

Joseph Okaly: 00:07:29

you, for the amount that's building up in your all income

Joseph Okaly: 00:07:33

account to hopefully invest a sizable portion towards yourself

Joseph Okaly: 00:07:36

to help you get closer to your goals. But also to any other

Joseph Okaly: 00:07:39

special expenses or goal items that you might have that, you

Joseph Okaly: 00:07:43

know, vacations or you know, things of that nature. Greatly

Joseph Okaly: 00:07:46

simplifying your irregular cash flow removes anxiety, stress and

Joseph Okaly: 00:07:52

cash flow work on your part, which frees up the mental

Joseph Okaly: 00:07:56

energy, and now extra all income account resources, to make life

Joseph Okaly: 00:08:01

more enjoyable for you.

Joseph Okaly: 00:08:03

Thanks for tuning in today. As always, if you are able to

Joseph Okaly: 00:08:06

implement what we cover, then that is fantastic. You have less

Joseph Okaly: 00:08:10

to worry about than before and can focus more on just, you

Joseph Okaly: 00:08:14

know, enjoying life. If you are wanting help with these things,

Joseph Okaly: 00:08:17

though, or have questions you need help in clarifying, check

Joseph Okaly: 00:08:21

out the 'Ask Joe' section on the show's website. That's www.

Joseph Okaly: 00:08:25

enjoy more 30s .com, that's enjoy more three zero s .com.

Joseph Okaly: 00:08:31

And if you enjoyed this episode, please make sure to follow and

Joseph Okaly: 00:08:35

review us on Apple podcasts or wherever you listen. There are

Joseph Okaly: 00:08:38

literally millions of young American families out there I'm

Joseph Okaly: 00:08:41

trying to reach and help just like you. The next episode is

Joseph Okaly: 00:08:44

the last of this season of "Your Money Multiplier" and it's

Joseph Okaly: 00:08:47

titled "Stock Option Mayhem!", where we're going to cover how

Joseph Okaly: 00:08:51

you can make sense of all those restricted stock, stock options,

Joseph Okaly: 00:08:56

stock purchase plans and so forth into a plan that can most

Joseph Okaly: 00:09:00

benefit you. Thanks as always for tuning in, and looking

Joseph Okaly: 00:09:03

forward to connecting with you again soon.

Voiceover Audio: 00:09:05

The conversations on this show are

Voiceover Audio: 00:09:07

Joe's opinions and provided for general information purposes

Voiceover Audio: 00:09:10

only. They do not constitute accounting, legal tax or other

Voiceover Audio: 00:09:14

professional advice for your specific situation. You should

Voiceover Audio: 00:09:17

always seek appropriate advice from a financial advisor,

Voiceover Audio: 00:09:20

accountant, lawyer or other professional before acting upon

Voiceover Audio: 00:09:23

any content or information found here first, Joseph affiliated

Voiceover Audio: 00:09:27

with New Horizons Wealth Management LLC, a branch office

Voiceover Audio: 00:09:30

of TFS securities Inc. and TFS advisory services an SEC

Voiceover Audio: 00:09:34

registered investment advisor member FINRA/SIPC.