Wondering when you’ll get paid next, what you’ll get paid or even if you’ll get paid is a dark place. It’s not fun. It’s stressful and it’s more than just kind of a downer. It’s very difficult on those who have an irregular income thanks to a job that perhaps does not always guarantee work. For example, my husband and I recently hired a land clearing company (and by recently, I mean last week) to come clear our property. We bought our dream home, but the people who built the house before we bought it did not clear our 1.16 acres except to actually place the house. What this means is that you cannot see our home and we have no yard, despite having a large corner lot. We’ve decided it’s time to remedy this situation, and we hired a land clearing company.
When the owner of the company came to the door to tell me that he’d accidentally cut a bunch of wires that were buried in the ground in half – and that includes my wifi internet connection, naturally – I panicked and told him that I work from home and rely on the internet. That led us into a conversation about irregular income and how we are his first job in over a month, though he has four lined up to begin in the middle of the month. It made me start thinking about irregular income, and how sometimes it’s not up to you whether or not you work. It also made me wonder how he manages to budget his income, and also how other people with irregular income do the same. Wait staff, bartenders, business owners, freelancers; many of these people have irregular income that makes it impossible for them to budget accordingly each month, so we thought we’d offer some helpful suggestions.
Start with a Budget
The best thing you can do to budget when you have an irregular income is actually budget. Start by making a list of your expenses, leaving nothing out. You need to include everything from your quarterly trash pickup bill to your pest control to everything in between.
The key here is to work the opposite way as those with a regular income. Instead of starting with what you bring home each month and subtracting what you owe to see what you have left, start with what you owe and figure out what you need to earn each month.
Create a Target Income
Now that you know what you owe each month, you have to create that income. It doesn’t matter how you do it, you have to do it. If it means prepaying your expenses in a separate account for future months when you have a successful month, do it.
Now you have to work to minimize your finances. You should owe as little as possible. It’s understandable if you have rent or housing, a car payment, insurance and utilities. But you should really not have much more than that. Other than groceries and gas, you shouldn’t have debt payments to include in your budget. This means you need to do whatever you possibly can to eliminate your debt so that you can minimize your monthly payments as much as possible. Call the cable company and ask for a discount, or get NetFlix in place of cable. Do whatever you need to do.
Save as much as Possible
When you have additional money, save it. You’ll never know when you will need it in the future, and now is as good a time as any to go ahead and save as much as possible. Do this and you will be very grateful to have the opportunity to relax a bit in the future.
Pay Ahead when Possible
Can you pay your health or car insurance ahead of time, such as a year at a time or 6 months at a time? If you can, and you can afford to do it, do it. This is going to help you minimize your expenses each month and give you a little less to worry about. Say you have a big month in March and you know that you can pay ahead; do it. Then pay as much ahead as possible. For example, even if you cannot pay your cell phone bill ahead of time, you know what it is each month, so put the amount you’d pay each month for the rest of the year into an account and eliminate that bill from your monthly expenses.
Create an Emergency Fund
Those with an irregular income need an emergency fund more than just about anyone else. Go ahead and create one. Create a few. Create one for unexpected expenses, such as car repair or household repairs or emergency trips or medical bills. Create another one for ‘lack of income’ months so that you can have a source of income to keep your bills paid. Create as many as possible, and put as much as possible into each account.
Do not wait until the end of a slow month to realize that you need to get to work figuring out a new way to make some money. Do it now. Do it at the beginning of the month. Your irregular income budget will thank you profusely for going into each month with the assumption that you need to work harder to make more because you are not going to make enough. The worst case scenario is that you make a lot more than you needed, and that’s not so bad.
Don’t Rely on Savings
Sometimes those with an irregular budget think to themselves, “Well, I have savings so I’ll be all right,” and they don’t work hard to make more money on a given month. Don’t do this. Because one way you might need that savings for reasons other than because you decided to be a little bit lazy that month. Don’t let this happen to you.
Create as many Money Making Ventures as Possible
Find work where you can when you need it. It’s not a bad idea to have as many different methods of money making as possible in your life at any given moment, and you will never regret this decision.
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