Budgeting on a Variable Income

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Do you ever feel like budgeting is impossible because your income changes from month to month? Hi, I'm Rob West. Maybe you're self-employed, work on commission, or depend on tips. If that's you, you're not alone. Today we're talking about budgeting on a variable income and how to find stability even when your paycheck isn't predictable.

And then it's on to your calls at 800-525-7000. This is Faith in Finance, biblical wisdom for your financial journey.

Well, if you've ever tried to live on a changing paycheck, you know how stressful it can be. One month feels great, you've got more than enough. The next month, you're wondering how to pay for groceries. But here's the good news: God's Word gives us timeless wisdom that applies even in uncertain financial seasons. Proverbs 21:5 says, The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.

That means whether your income is steady or unpredictable, a plan is essential. The key is to budget based on what you know, not what you hope you'll earn. Many people make the mistake of setting their budget around their best month, wise stewardship means building your plan around your lowest or average month instead. Start by looking back over the past six to twelve months. What's the lowest month?

What's the average? Your baseline budget should be built on that lower number, not your high months. Think of it as your bare minimum budget, what it takes to cover your needs: housing, utilities, groceries, transportation, basic giving. If you earn more than that in a given month, great, but the baseline keeps you from overcommitting when your income drops. Here's an example.

Let's say your income ranges from $3,000 to $6,000. Build your budget as if you'll make $3,000. If you bring in $5,000, you have $2,000 in margin. That extra amount goes toward priorities such as savings, debt repayment, or future expenses. That's how you build stability in unpredictable seasons.

When you receive irregular payments, the timing can be just as challenging as the amount. That's why it helps to create what I'll call an income holding account. Here's how it works. All income goes into one account, your holding tank. Then, once a month, you transfer only your budgeted amount into your spending account, just as if you were paying yourself a regular paycheck.

This smooths out your cash flow and prevents you from overspending when you have a big month. Proverbs 27:23 says, Know well the condition of your flocks and give attention to your herds. For modern day stewards, that means knowing where your money is, where it's going, and when it's available.

Now, if your income fluctuates, an emergency fund isn't optional. It's essential. Start with a one-month buffer if possible. The goal is to have enough saved so that when a slow month hits, you can still pay yourself your baseline amount. Over time, aim for three to six months of living expenses.

During boom months, discipline yourself to put part of that extra income into your buffer before anything else. That way, when the bust months come, and they will, you're ready. Another way to manage variable income is to distinguish between fixed and flexible expenses. Fixed expenses like rent, insurance, loan payments don't change much, but flexible ones like dining out, entertainment, and travel can be adjusted month to month. During slow months, consider reducing your flexible spending.

In strong months, you can restore or even increase your giving and savings goals. It's about living with margin and flexibility, not guilt or fear. Remember, self-control is one of the fruits of the Spirit listed in Galatians 5. That includes self-control and how we handle fluctuating finances. One of the easiest ways to get thrown off budget is by those surprise expenses that really shouldn't be surprises.

Things like insurance premiums, car repairs, or property taxes. To prepare for them, list out all your irregular expenses for the year and divide each by 12. Then, every month, set aside that amount into a sinking fund, a savings bucket for future costs. When that bill shows up, you can breathe easy, no scrambling, no stress, just the freedom that comes from faithful planning. Finally, remember this: even when your income is unpredictable, God is not.

Matthew six reminds us that Our Heavenly Father knows what we need before we ask. He feeds the birds and clothes the flowers, and He will provide for His children.

So, whether your income changes weekly or seasonally, these principles bring lasting confidence because they're rooted not in your paycheck. but in God's faithful provision. To take a next step, download the FaithFi app, where it has simple tools to create a flexible budget, manage your cash flow, and cultivate faithful stewardship. You can find it at faithphy.com and click app at the top of the page. That's faithfi.com and click app.

Alright, we're back with your questions after this. Stick around. Imagine having biblical financial wisdom delivered to your inbox every week, helping you integrate your faith and financial decisions for the glory of God. At faithfy.com, you can join a community of over 70,000 people who are already receiving our weekly wisdom email, filled with articles, videos, podcasts, and exclusive offers on resources that will deepen your understanding of biblical stewardship. Start your journey today by creating your FaithFi account at faithfy.com.

Just click sign up. Are you looking to maximize your charitable impact this season? The National Christian Foundation has a smart solution. It's called a Giving Fund, and it helps you give more strategically, grow your balance tax free, and amplify your charitable impact. If you want a donor-advised fund that aligns with your values, open a giving fund today and start making a bigger difference for the causes you love.

Learn how at faithfi.com forward slash NCF.

So, thankful to have you with us today on Faith and Finance. I'm Rob West, and I'm ready to dive into your questions today on anything financial. The number to call is 800-525-7000. We've got some lines open that probably won't be the case a little later in the broadcast.

So, call now with whatever you're wrestling with in your financial life, and here's our promise to you: we'll be hopeful and encouraging as you invite us into your story, always pointing you back to scripture so we can look at money. Through the lens of a biblical worldview, that we're managers or stewards of the King of Kings resources, that God has a lot to say on this topic.

Now, it's not that He needs our money, He owns the cattle on a thousand hills, but instead, it's what He wants for us. He knows, and it's clear in God's word, that if we allow it to, money will compete with God for first position in our lives. Our culture reinforces this idea that our self-worth is equal to our net worth.

Well, we just know that's simply not true. Our identity is rooted in Christ. God is our ultimate treasure, and money, well, it's one of God's good gifts that we can use to provide and enjoy, but also to bless others around us. And that comes through our generosity. But I realize you have practical daily decisions that you're wrestling with in your financial life.

And so, each day on this program, we tackle those together.

So, call right now. What are you waiting for? 800-525-7,000. I'd love to talk to you today. Will begin today in Chicago.

Herman, how can I help you?

Well, sir. How you doing today? I'm great. Thanks for your call.

Okay, here's my question. The Lord has been good regardless of what happens. He's always good, right? This would allow me to achieve uh I got a nice little savings. Right now I have one hundred and seventy thousand.

I've been able to put up ten thousand a month. In November, my plan is when I have two hundred to start investing that ten thousand per month. And um in in a more uh profitable or should I say more risky Uh venture.

So I took your advice and went to the bank I'm at every bank getting 4% on the money now, but I want to try to get a little bit more after I a store up two hundred thousand.

So what you think I should do with that $10,000 per month?

Well, first of all, congratulations just on living in such a way that you have that kind of surplus. I think the first question we always need to ask, and it's not just because you have $10,000 a month surplus. I think this is incumbent upon each of us, is to begin to think through the question, how much is enough, so that we can determine how much should be directed toward giving and how much toward long-term savings. And that's not an answer I can give you. That's ultimately between you and the Lord.

But I think thinking through both how much is enough in terms of our lifestyle spending and then how much is enough ultimately for our accumulation, how much should we be saving for the future? Because what we wouldn't want to do is to over-accumulate. And so I think, you know, praying through, thinking through that question.

Now, for that portion that you want to continue to sock away into long-term savings beyond the, you know, I think you said 170 you've already accumulated and the additional 120,000 a year you can put away. If we've got a long time horizon, meaning preferably 10 years or more, then we want to do two things. Number one, we want to try to push as much of it into a tax-deferred environment as possible so that you can get a current tax deduction when it's going in because you've got a lot of income, you're probably paying a lot of tax. And you get the investments, which would be the second piece. We want to get that invested so that it can grow.

We want to get the investments in a tax-deferred environment so that the capital gains taxes that would be imposed on investments that appreciate in a taxable account and put a drag on the investments that would not exist in the tax-deferred environment, which is why the retirement account is so helpful.

So, let me stop there. Do you have access to a retirement plan at work or are you self-employed? Give me a bit of an overview on that. No, I'm not self-employed. My company does have a 401k which I'm involved in.

Uh they're already maxing out when I can put in Now I'm seventy years old, so I don't have well, I don't know how much time I have, but uh That's up to the Lord, right? But Yeah, I'm seventy, so Yeah. Yeah. Yeah. Okay, got it.

Now, you mentioned you're maxing out their portion, but are you maxing out your portion? Because as a 70-year-old person, you can put in up to $31,000 as your employee contribution. Are you maxing that out? No, I'm only putting up ten percent.

Okay.

So that would be the first thing that I would do because I would love for you to get as much as possible into a tax-deferred retirement account. Because with all that income that you have coming in, you're probably paying a lot in taxes. And so if you could go ahead and increase your employer contribution, and you'd have to work with your HR department on this up to what would ultimately put in the max for the year, which based on your age, being 50 or older, would be $31,000. That's going to take, you know, even more away from your taxable income and save you some taxes. Then on top of that, you're probably going to want to fully fund a traditional IRA, which over the age of 50 means you could put in $8,000.

So that's, you know, between those two could get into a tax-deferred environment and then get that invested. The rest, you're just going to have to add to the $170,000 you've already accumulated.

Now, I I would set aside what you need for emergencies and leave it in that high-yield savings account. I would probably say somewhere between three and six months' worth of expenses. And then the rest, I think you could go ahead and deploy that. Uh, in an investment strategy.

Now, typically at age 70, you know, we'd be talking about a 40, 60 portfolio, 40 stocks, 60 bonds. But you may want to be a little more aggressive than that. I would, however, caution you against just kind of, I know you use the word speculative, meaning, you know, should you, given the surplus you have, take on a much higher amount of risk? To try to grow it quicker. And I would say, you know, let's not go overboard there and try to quote make up for lost time by taking an unnecessary amount of risk, but maybe you dial that stock portion up.

Maybe you flip it instead of being 40-60 like you would typically be at 70, maybe you're 60-40, 60% stocks, 40% bonds. And those bonds will do well as the interest rates come down.

So, my next steps for you would be: let's max out your 401k contribution. You're going to have to get with your company to do that. Let's start funding a traditional IRA, at least while you're still working, to further reduce your tax liability. And let's get all of it invested-the $170,000 minus your emergency fund plus the $10,000 a month you'll be adding to it. And if you don't want to do that yourself, I'd hire a certified kingdom advisor, which you could find at faithfi.com.

And that would be a professional that could come in and make the investment decisions for you. And the two of you would talk through the degree of risk you're willing to take just based on your goals and objectives. But give me your thoughts on all that.

Well And it just It just came to me. That's what I should have done in the first place, call it the CKA. Yeah. Well, that's okay. It's a helpful conversation, and our listeners got to hopefully take some things away from this.

But yeah, I think that's right.

So I would just go to our website, faithfi.com, click find a professional. There's a ton of CKs right there in Chicago. I'd interview two or three and find the one that's the best fit. That advisor could do the planning for you and also deploy the investments as well.

Okay.

That's what I will do. Thank you very much. Appreciate it. You're welcome, Herman. Lord bless you, my friend.

Thanks for calling today. We're going to take a quick break, folks. Back with more after this. Looks like we have two lines open: 800, 525, 7,000, encouraging you, taking you back to God's Word, and helping you make financial decisions in light of biblical wisdom. That's what we do on this program each day.

I'm Rob West. Stick around. A lot more to come just around the corner. You can do more than make a year-end gift. You can become a FaithFi partner.

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Great to have you with us today on Faith and Finance. We're taking your calls at 800-525-7000. Let's go to Plant City, Florida. Hi, Carol. How can I help?

I have moved to an independent living facility. and I'm in the process of selling my condo. It should close on November 3rd. And um was wondering What am I? I'm going to tithe on the proceeds.

I do need the proceeds to help pay for the independent living. And I would appreciate it. Appreciate your advice. Yeah. Well, if you decide to give a tithe, you know, kind of looking back to the Old Testament principle of the tithe and the idea that we would give off of the increase, 10% is just, you know, kind of a nice, easy way to give proportionately as God provides.

And clearly, you know, where you have a profit on an asset that's sold, that would certainly be considered an increase.

So, how does that apply to a condo sale?

Well, you know, you would look at what did you sell it for? and then you would subtract what you paid for it, and that would be the profit or the gain. Therefore, if we wanted to tithe on it, that would be the amount that you would apply the principle of the tithe to, and then you give a tenth.

So, did you have an increase on the selling price minus the purchase price that you originally paid for it? Did it appreciate in value? Very much, yes. I was able to buy it at a really good price. I purchased it at $79,000.

and it's selling for two hundred and five thousand.

Okay, got it.

Yeah. And so, you know, I mean, you've got quite a bit of gain in there. And, you know, so that two hundred and five, you know, minus seventy nine, I mean, that's one hundred twenty six thousand.

So if you wanted to tithe on it, that would be twelve thousand six hundred. And I think with the principle of the tithe, I mean. Not to go too deep into this, the word tithe appears 49 times in God's word. Interestingly, in the New Testament, in the 21 chapters of scripture that have the most rich Teachings on money from Jesus and John and Matthew and Luke and Mark and Peter and Paul, you will not see a single teaching on the tithe. It's referenced.

But where it's referenced, it's really often an admonition to the Pharisees that were prideful in their tithe. And so it's really not a part of the core teaching of the New Testament.

Now, does that mean we should dismiss it? Not necessarily. I think giving 10% is a really helpful way to step into faithful, consistent generosity, starting with your local church. But I think as New Testament believers, really what we see in scripture is it's more about the heart posture than a specific set of rules. And I think, you know, my friend Randy Alcorn calls the tithe the training wheels of giving.

Perhaps that's a beginning point. And those of us who have seen what Jesus has done on our behalf, we should be givers and perhaps well beyond the tithe.

So, what does that mean for your proceeds from this condo sale where you have $126,000 in gain? If the Lord is leading you to tithe on it, great. That'd be $12,600. I would say you can't out give God, and you'll probably never, well, I'm confident you'd never regret it. But if you decided that you needed all that money to go into this independent You know, living facility, God is not an accountant.

He doesn't need our money, he wants our hearts. And so I think that's ultimately between you and the Lord, where you seek his heart for this and then follow the leading of the Lord. And that may or may not involve you giving. Out of the sale of this condo. Does that make sense though?

Yes, it does. I do trust him, and I want to be in a right relationship with him, and I do want my heart. posture to be right. Yeah. Yeah.

Well, again, it's less about checking a box and it's more about you just being a faithful, generous giver, holding what God has entrusted to you loosely, trusting him for your provision. It sounds like that's been a hallmark of your life, something you take very seriously. And again, I would say your decision as to whether or not you do any giving out of the sale of this condo is between you and the Lord. There's not a right or wrong decision here.

So make that a matter of prayer and then, you know, proceed. But I'm confident your heart for giving and generosity and serving the Lord through the worship in our giving is the right one, whether or not you give anything out of this condo sale. And all the best to you in this next season of life. Thanks for your call today, Carol. Lord bless you.

Lynn has been waiting patiently in Ohio. Lynn, I understand you have a testimony. Go right ahead. Yeah, I want to express my gratitude. for all the ways that you and those behind the scenes beautifully, respectfully Yeah.

Um intelligently offer the information so every person is able to take it in. it's critical. And I am married to someone who's had all those skills. And listening to you further enhances my development and understanding. And I just want you to know how grateful I am for that.

Well, I want you to know I'm grateful that you shared that. That means a lot. And I appreciate you calling out the team behind the scenes because they make all of this possible today. The amazing group that we have serving us that includes, among others, Omar and Tahira and Taylor, but everybody here at Faith Vi that makes this possible. And I appreciate you calling out the way we care for listeners because we really do.

I mean, it's a privilege to be invited into people's stories each day. And wherever we're at on the journey, and we all have made plenty of mistakes, none of us have gotten it right, but we all come together with a desire to be found faithful to the Lord. And that's really important. And I think to your point, there's an element of spiritual formation that comes through money management because it's that daily demonstration of what we value and what we trust in and where our priorities are. And so there's a lot more about our spiritual formation than.

We might realize when it comes to money management. And that's really one of the keys we try to highlight here on this program.

So, all that to say, Lynn, thank you for your comments today. We appreciate it.

Alrighty, take care now. Lord bless you. Well, folks, that's going to do it for us today. Speaking of that team behind the scenes, Taylor Stanrich is one of our writers. He's the producer and production manager of our program each day.

He sent me a note as I was talking to Carol, and I think this is a brilliant thought that I want to share with you. He said, Will you remind Carol that we don't give or tithe to get right or be right with God? What we give in gratitude. We give Because God has made us right with Him. Isn't that powerful?

What a big idea. You know, our giving. Is really not about us trying to earn God's favor. We've already got that. He loves us more than we could ever imagine.

He demonstrated that by sending his son, who shed his blood for us that we could be reconciled to the Father. And our giving is a response to that. God has made us right with him. And so it's just an overflow of our gratitude. to God for the grace, that unmerited grace.

Favor that he has extended to us that we did not deserve, we could never earn, but he extended it to us. through the person of Jesus. of the triune godhead and as a result of that We are now reconciled to the Father once we accept Him and trust Him as our Savior. Isn't that beautiful? And isn't it cool that our money management can be an expression of that as we give as a response to that and then be able to participate in God's activities?

Well, once again, the amazing team serving us today: Lisa, Omar, Tahira Taylor. Everybody here at FaithFy that makes this possible. Come back and join us tomorrow. We'll see you then. Bye-bye.

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