Friday, August 3, 2012

New Income source and how to budget

We've got a pretty good set-up going these days, though it hasn't been easy to get there.  My wife stays at home with our two boys and I am employed by State Government, so, we don't have a lot of extra money.  But, we've been on a pretty good budget for the last 20 months or so.  We live completely on my salary alone.

Since then, I've started some part time work that has brought in additional money.  Since it's a contract type job, I save most of it, particularly to account for taxes and expenses and such, and am saving in case I need to purchase a new car for that work (since it requires a lot of driving).  We do use some of that money for spending if we want to, and I also invest a portion in my ROTH IRA.

So, the topic of this post is related to my wife and the possibility of her starting a part-time job.  Now, the job doesn't pay a whole lot, and it is around 10-15 hours a week, but it works out to around $600 (net) a month.  So, this brings us to the discussion of how to budget this additional money.  My recommendation, I think, would be to budget percentages, but for things that do not increase or "Standard of Spending".  I would propose something like:

  • 20% for work related expenses, including gas, clothing, food
  • 20% towards retirement IRA (ROTH or Traditional)
  • 20% towards the big goal we're working on (currently mortgage payment)
  • 20% towards personal savings
  • 20% for one of our large sinking funds (car replacement, home repair, etc)
We'll see!