How to adjust your budget to track net income

When you set up your Savings and Spending Budget, you set high-level saving and spending goals for each of your budget groups based on your gross income. However, if you only track net income in Money, your budget will be inaccurate. The numbers in the Planned column of the Working budget page will be based on your gross while the numbers in your Actual column will be based on net. For example, you can plan to contribute $500 per month to retirement, but if you have that money taken out of your paycheck automatically and only track your net pay, you will not be able to see in Money that you've met your $500 goal every month.

The budget works best when you set up Money to track gross pay, including contributions to retirement, taxes and other items. However, you can adjust your savings and spending goals in the budget for net if you want.

First, adjust your Income budget group:
  1. If you have not done so already, complete setting up your Savings and Spending Budget using your gross income estimate to set your savings and spending goals.
  2. On the Working Budget page, expand the Income budget group, click the category Wages and Salary : Gross Pay, and then click Remove.
  3. Verify that the Income budget group includes all of the income categories you use to track your income. If a category is missing, click Add, and then add any missing categories.
  4. If you have income from an account that you track in Money, such as a retirement account, click Add, and then add the account to the Income budget group.
  5. Click the Income budget group, click Change planned amount, and then enter the amount of your monthly net income.
Next, adjust your Retirement budget group. It may help to have a copy of your paystub handy.
  1. Click the Retirement budget group, and then click Change planned amount.
  2. In the amount box, click the arrow, and then subtract the monthly total of the retirement contributions that come directly out of your paycheck, and that you do not track in Money.
  3. Click OK.

For example, Pat plans to contribute a total of $500.00 to retirement, 10% of her gross income. $300.00 per month is automatically taken out of her paycheck before taxes. In addition, Pat sets aside $200.00 per month from her net pay to put into an IRA. If Pat plans to use the Savings and Spending budget but will track only her net pay, she will enter $200 in her Retirement budget group. Her overall goal is still $500.00, but since $300.00 is being contributed automatically, she does not need to track it in Money.

Next, adjust your Savings and Debt budget group, if you need to, using the same steps used for the Retirement budget group. Deduct the amount of any money you have transferred to a savings or investment account that you do not track in Money. If you have money deposited directly into a savings account that you do track in Money, then it is considered part of your net income and you should not deduct that amount.

Next, adjust your Committed Expenses budget group.
  1. Using your paystub as a reference, total the expenses that are automatically taken out of your gross pay, such as taxes, insurance, and charitable donations.
  2. Click the Committed Expenses budget group, and then click Change planned amount.
  3. In the amount box, click the arrow, and then subtract the total of the deductions that come directly out of your paycheck, and that you do not track in Money
  4. Click OK.

Note

Depending on your financial situation, the percentages that Money will automatically calculate for your planned amounts based on net may or may not be close to the planned amounts that you set up based on gross. For example, Committed Expenses that represent 60% of your gross income may, upon adjustment, be 70% or more of your net income.

The exact percentages are not important as long as the amounts that you set up for each budget group are realistic amounts that you plan to save, spend, and track in Money.