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Budget Report

Reports > Budget Report

The Budget Report is a very powerful report of the software, because it can help show both parties where they will be on an after-tax basis, assuming the incomes and expenses that have been input.

One important thing to understand is the “pro forma” nature of the budget report in the current year in monthly view.

For the current year, you may want to see budgets in one of two ways:

1. Showing precise numbers for the current year; or

2. As a pro forma statement of what budgets will be going forward.

These two views can be different if there are key numbers that will change mid-year, including:

· Different mortgage or rent payments, because of a refinance, mortgage payoff, or purchase of new residence.

· Child support and/or spousal support payments that start mid-year.

· Debts that will be paid off.

Here is how to use the Budget Report to show the view you want:

1. To show precise numbers for the current year specify the time period to be “annual.”

2. To show pro forma numbers of what budgets will be going forward, specify the time period to be “monthly.”

You specify the time period by clicking the link at the top of the report for Budget Report options.

If you select “annual,” the software will simply take the current year’s cash flows and display them as they actually are. If there are six months of child support, the child support number will include just six months of child support. The bottom line for the year will be that year’s actual bottom line.

If you select “monthly”, the software will look at what the payments will be in December. Thus, any child support and alimony payments that are starting mid- year will be shown. The monthly number will include mortgage payments after any refinancings, will exclude mortgages that have been paid off, etc.

It will thus give you a pro forma view of what monthly payments will be going forward.

If you click the link at the top of the screen for Budget Report options, you will also see a number of other options relating to the display of the report.

You can include or exclude income, living expenses, taxes, and alimony and child support.

You can also show the report only for one party.

You can show one time period or three (weekly, monthly, and annual).

You can change the title of the Budget Report.

You can specify whether contributions to IRA and 401(k) plans count as expenses for purposes of the report.

The argument for counting IRA an 401(k) contributions as expenses is that they reduce available cash.

The argument for not counting them as expenses is that they are simply transfers of money from one pocket to another.

You can make your selection in this regard based on what exactly you are trying to show with the Budget Report.

(For purposes of the net income spreadsheets, the software counts them as expenses, but it also increases the IRA/401(k) asset category. So you see both sides of the transfer.)

You can also change the sequence of sections, so that the income section is first, taxes section is second, and expenses section is after that.

This allows you to first show “income after taxes,” and then show income after taxes and living expenses.