Part of Dev’s pay arrives as a lump every quarter. Last time: a sofa, a weekend, and £1,400 that simply went. The wrong question is what to treat himself to. The right one is which envelope is short.
Dev, twenty-nine, software engineer. The households in these Shorts are illustrations built from typical UK figures, not real people, and every number below is worked on the household’s sheet.
What happened
Every few months Dev asks himself the same question: what shall I treat myself to? The question comes round because part of his pay arrives as shares, and he takes them as cash when they vest. That means a lump of £4,000 lands in his account four times a year, £16,000 in all. He is twenty-nine and a software engineer, and by the time each new lump arrives, he generally cannot say where the last one went.
The most recent vest was typical. £1,900 went on a sofa. £700 went on a weekend away. Both of those he could point to. The remaining £1,400 simply went. It sat in his current account alongside everything else, and there it quietly lost its name, drifting into the ordinary spending of the following weeks until nothing of it was left. The lump had felt like a windfall on the day it arrived, but a lump left in a current account is not really a windfall. It is a slow leak with a pleasant beginning.
The real trouble was that Dev had been asking the wrong question. The better one is not what to spend it on, but which envelope is short. For Dev the answer was obvious once he looked. His annual bills, insurance and the holiday, come to £2,400 a year, and he had never once put money aside for them in advance. Spread across the year, that is £200 a month. Put another way, it is one vest a year: let a single lump cover the bills before it is spent on anything else, and the other three really are his.
So now each vest is treated like a payday. When the money lands, it goes to the top of his plan unassigned and stays there until every pound has somewhere to go. The annual bills come first. After them comes his Next rise envelope, the one that holds back part of any increase in pay. Whatever is left after that is the treat, and it is a genuine treat, because it is no longer next year’s insurance dressed up as spare cash. When the last vest arrived, it sat unassigned for a single evening before £2,400 went to insurance and the holiday, and the rest was his to enjoy.
The rule he uses is a simple one for anyone whose money comes in lumps: take the year’s bills and divide them by the lumps. That tells you how many of them are already spoken for before they ever arrive.
The working
Every figure the Short says, and where it comes from on the household’s sheet.
| The Short says | Figures | Derivation |
|---|---|---|
| four thousand pounds, four times a year | rsu_vest = 4,000 | on the sheet |
| six thousand one hundred | takehome_now = 6,100 | on the sheet |
| he takes them as cash when they vest | premise (rsu_vest note) | on the sheet |
| nineteen hundred / seven hundred | vest_sofa = 1,900; vest_weekend = 700 | on the sheet |
| fourteen hundred | rsu_vest - vest_sofa - vest_weekend | on the sheet |
| two thousand four hundred a year | annual_bills = 2,400 | on the sheet |
| two hundred a month, or one vest a year | annual_bills / 12; annual_bills <= rsu_vest | on the sheet |
The turn
A lump in a current account is not a windfall; it is a slow leak with a nice start, because the current account is where money loses its name.
The Short
Monday
- The year’s bills divided by the lumps is how many lumps are spoken for before they land.
- Assign each one the day it lands.
In Zeroed
Dev’s last vest sat in To Be Budgeted for one evening. Two thousand four hundred went to insurance and holiday, and the rest was his.
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