If you’re self-employed or have seasonal employment, there is a chance you don’t make the same amount of money every month. Many people work hourly or commission-based jobs, that change up their income every month. How can you budget when you are dealing with irregular monthly income? Here we’ve gathered a few key strategies that can help you budget despite your irregular income.
Set a Baseline
Look through all the invoices, receipts, and bills for the last two years of income. Check what is the most amount of money on a given month you earned? Now look for the average amount of money? For now focus on the smallest number, the least amount that you made in a particular month and prepare to budget for that period. In this way, you’ll have the major costs covered. Then, if you have a good month, you can go back and budget up.
Create a Budget
You might not know of how much you will earn this month but you will have a rough idea of what your spending will look like.
Make a spreadsheet of your important and essential expenses. This can include: rent or mortgage, household bills, phone, insurance, food.
The list might not be perfect but you will have an idea of how much is going out each month, you can budget based on how much is coming in.
Pay Yourself First
This method is one of the most common financial advice around. But it’s a really good one. By paying yourself first you are stocking away some cash for yourself, whether that’s into saving account or retirement account. Not only will you be able to take advantage of compound growth to help grow your money faster, but you’ll also help ensure that your financial goals are getting funded before life happens. All it takes is a little dedication and a lot of discipline.
One of the most important strategy for budgeting on irregular income is being flexible and staying on top of it. If your income ends up being higher than you planned, make sure you add into your budget.
A personal budget allows you to focus on what you can do rather than on what you can’t, even if you have irregular income. Creating a realistic budget makes it easier to manage your money.