![]() You may be tempted to pull funds from your savings goals during low-income months, and stashing your savings in a separate, high-yield savings account can force you to pause and think twice before dipping in. Physically separating your savings from your everyday spending money may be especially important when you’re creating a budget on an irregular income. “By building up an adequate amount of savings, you will create a situation where you can pay yourself the salary you need each month.” 3. “We call this fund the ‘boom and bust’ fund,” Johnson says. During months when you make less than $4,000, draw from that account to bring your salary up to $4,000. During months when you make over $4,000, put the extra money into a separate savings account. Consider your average monthly expenses (shameless plug for tip 1) and use that number as your baseline.įor example, if your monthly household bills, groceries, business expenses, savings goals, and other necessities add up to $4,000, that’s your salary for the month. Johnson says if you’re budgeting on a fluctuating income, you can adopt the zero-sum budget by creating a “salary” for yourself. However, without automated tracking, it can be difficult to consistently keep your information up to date. If you’re budgeting on a fluctuating income and apps aren’t your thing, you can use a spreadsheet or even a pen and notebook to track your cash flow. You may even be able to pull in previous months’ or years’ worth of data, which you can use to calculate your averages. Many budgeting and spending apps can help with the tracking, including ones that can connect to your online bank and credit card accounts and automatically pull in your transactions. You want to start tracking as soon as possible to build up accurate data on your average income and expenses.įor example, once you have six months’ worth of income and expenses documented, you can divide the total by six to determine your average income and expenses by month. But it can be particularly important if you’re trying to budget on an irregular income because you may have especially high- or low-income periods. Of course, that’s the basis for any budget. If you want to start budgeting on a fluctuating income, you need to know how much money you have coming in and how much you’re spending. Determine your average income and expenses How do you budget on an irregular income? Consider these four strategies to help you budget with a variable income and gain financial confidence: 1. ![]() You may need to spend time testing out different methods when you first start budgeting, but, “if done correctly, it can really empower you to control your life,” Winters says. While you can’t always control when you get paid or the size of each paycheck if you’re a freelancer, contractor, or gig economy worker, you can take control of your money by brushing up on some budgeting basics that will help you manage these financial extremes.Īntowoine Winters, a financial planner and principal at a financial planning firm, says creating a budget with a variable income can require big-picture thinking. If you have an irregular income, you know how great the good times feel-and how difficult the lean times can be.
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