Yes, even on an irregular income, you can budget effectively.

And you should.

One in three Americans prepare a detailed monthly budget, but it’s especially difficult if your paycheck comes in irregularly. You may be an artist, consultant, freelancer, temporary worker, or a commissioned salesperson, but there are ways you can organize your finances to meet your needs (and even afford a shopping spree, or two).

Although it may seem more difficult because the amount you earn varies on a weekly, monthly, or even yearly basis, it can be done when you keep these budgeting guidelines for inconsistent incomes in mind.

Step One: Figure out your fixed expenses

When it comes to budgeting, always begin with your fixed expenses. These are monthly expenses that are mandatory, whether you make $1,000 that month or $0. Although your income is unpredictable, these essential expenditures are items you can’t live without. Track your expenses and follow the 50/20/30 rule, which says that there are three types of expenses: essentials, priorities, and lifestyle. Essentials or fixed expenses include rent or mortgage, health insurance, internet service, or medical costs you must include in your core budget.

Step Two: Budget for important stuff that pops up

“I can’t believe I actually spent that much for electricity this month!”

You know about those expenses that catch you by surprise every month? When budgeting for variable fixed expenses (like groceries or electricity), hope for the best but prepare for the worst. The cost for this type of fixed expense changes monthly, and although they may seem uncontrollable, you have more power over them than you think. Groceries, for example, are costs we can cut down drastically with coupons or by going for another more budget-friendly brand. Remember: Preparation is key. You may have a set budget for variable fixed expenses but be prepared to trim down those costs when you have to.

Step Three: Know the devil in your wallet

Go ahead! Shop, buy a book, grab a few drinks with friends, but only when you’ve got the extra moolah. Don’t do it, however, if you don’t have the funds.  If shopping is an absolute must, keep some cash in your wallet for impulsive purchases, like the next time you spot a pair of shoes that you must have.  But let’s be honest, is hopping an absolute must?  When on irregular income, it is best to keep our priorities top of mind.  

Step 4: Estimate your income for next month

Your monthly income may be sporadic and be hard to predict, but by the middle of the month, you should be able to paint a picture of how next month will look financially. Now that you have a better idea of your monthly expenses, estimate your income. Be hopeful and realistic. Base it on the lowest amount you’re most likely to bring in as a way of preparing for the month to come.

Step 5: Cover gaps in income

When your income for the month just doesn’t cut it, make sure you’ve got savings set aside. It’s important that you make your savings account your new best friend. To avoid exhausting all your savings, replace the amount as soon as your income improves. Don’t forget to set aside and add more to your savings whenever you’re experiencing a good month.

Step 6: Find ways to make short-term money

Auction off clothes you hardly ever wear on eBay, or look for ongoing contracts that let you earn some quick money in a short time. This may just balance out your monthly highs and lows.

Keep those guidelines in mind, and making ends meet–even with an irregular income–is a definite possibility!

Got any of your own budgeting tips? Share your stories and leave a comment below!

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