"A budget tells us what we can't afford, but it doesn't keep us from buying it.” – William Feather
If you’re self-employed, a freelancer in any trade or a sales person working on commission, you’re familiar with the stress that comes with an inconsistent income. Wondering month-to-month if you’ll make enough to cover your bills and stay ahead or if there is a bill that will need to be pushed to another month. Of course, that just means you will need to make more money that month.
In order to live consistently with an inconsistent income, here are 5 tips you might need to take.
1. Stay on budget
If you’re not living with a budget, you need to. Create a budget that includes these necessary expenses as well as the things you’d like to add in when you can. Staying on top of your budget will help you stay in control of your finances. You’ll be able to see what you owe and what’s been paid at a glance.
Review your budget at the first of the month so you know what your goal is for that month. Review your budget weekly to see what expenses you can pay and where you are financially. And review again at the end of the month to see where you fell short and what you need to make up.
2. Be meticulous about your expenses
You need to know the absolute minimum amount you need to live each month. This includes living expenses like rent/mortgage, utilities, and food as well as other necessities like insurance. Include everything that absolutely has to be paid. Other expenses like gym membership and entertainment can be added later when finances allow.
One thing that should be included as a necessity but often isn’t is a savings account. Especially if you have an inconsistent income, you need an emergency fund for those months when your income level is down.
3. Live on the money you have, not the money you expect to have
Work towards living on last month’s income instead of the current month. This will take some planning and saving as you’ll need to have at least one month of your regular income put aside.
Use your income from the previous month to plan your spending and saving for the current month. Having enough money in the bank to cover this month’s expenses will reduce some stress and allow you to focus on the future (next month) instead of worrying about the present (this month).
4. Clear out your debts
If necessary, a short-term push to resolve your unsecured debts can open up a lot of room in your budget and make your monthly expenses much easier to handle, even on an inconsistent income.
If credit card debts are a big part of your current budget, find ways to prioritize getting those paid down quickly. Consider working more (if possible) to increase your income, consolidating your debts into a more affordable payments, or using a debt management plan to take advantage of the associated low interest rates and get out of debt quickly.
5. Use technology to simplify your life
Whenever possible, find appropriate tools to help make your life simpler. There are a variety of apps that can help you budget and stay on top of your finances.
Get a free app that will help you manage your finances in one spot. You can create a budget, track your spending, and even connect your credit and debit cards and your monthly bills.
If you need to pay down debt and create some savings, most of the apps have a built-in accountability partner to help you stay on track with your goals.
Living on an inconsistent income can be challenging, but with careful planning and discipline, it is entirely manageable. By budgeting effectively, prioritizing expenses, building an emergency fund, diversifying income sources, and continuously educating yourself on financial management, you can create a sense of stability and control over your finances. Remember, flexibility and adaptability are key. By implementing these tips, you'll be better prepared to handle the ups and downs of variable income and maintain a balanced and stress-free financial life.
In order to live consistently with an inconsistent income, here are 5 tips you might need to take.
1. Stay on budget
If you’re not living with a budget, you need to. Create a budget that includes these necessary expenses as well as the things you’d like to add in when you can. Staying on top of your budget will help you stay in control of your finances. You’ll be able to see what you owe and what’s been paid at a glance.
Review your budget at the first of the month so you know what your goal is for that month. Review your budget weekly to see what expenses you can pay and where you are financially. And review again at the end of the month to see where you fell short and what you need to make up.
2. Be meticulous about your expenses
You need to know the absolute minimum amount you need to live each month. This includes living expenses like rent/mortgage, utilities, and food as well as other necessities like insurance. Include everything that absolutely has to be paid. Other expenses like gym membership and entertainment can be added later when finances allow.
One thing that should be included as a necessity but often isn’t is a savings account. Especially if you have an inconsistent income, you need an emergency fund for those months when your income level is down.
3. Live on the money you have, not the money you expect to have
Work towards living on last month’s income instead of the current month. This will take some planning and saving as you’ll need to have at least one month of your regular income put aside.
Use your income from the previous month to plan your spending and saving for the current month. Having enough money in the bank to cover this month’s expenses will reduce some stress and allow you to focus on the future (next month) instead of worrying about the present (this month).
4. Clear out your debts
If necessary, a short-term push to resolve your unsecured debts can open up a lot of room in your budget and make your monthly expenses much easier to handle, even on an inconsistent income.
If credit card debts are a big part of your current budget, find ways to prioritize getting those paid down quickly. Consider working more (if possible) to increase your income, consolidating your debts into a more affordable payments, or using a debt management plan to take advantage of the associated low interest rates and get out of debt quickly.
5. Use technology to simplify your life
Whenever possible, find appropriate tools to help make your life simpler. There are a variety of apps that can help you budget and stay on top of your finances.
Get a free app that will help you manage your finances in one spot. You can create a budget, track your spending, and even connect your credit and debit cards and your monthly bills.
If you need to pay down debt and create some savings, most of the apps have a built-in accountability partner to help you stay on track with your goals.
Living on an inconsistent income can be challenging, but with careful planning and discipline, it is entirely manageable. By budgeting effectively, prioritizing expenses, building an emergency fund, diversifying income sources, and continuously educating yourself on financial management, you can create a sense of stability and control over your finances. Remember, flexibility and adaptability are key. By implementing these tips, you'll be better prepared to handle the ups and downs of variable income and maintain a balanced and stress-free financial life.
