Budget without a Fixed Income
Whether you are a student, a self-employed businessperson or someone who earns a commission, managing money when your income is seasonal can be very tough. Sometimes creating a budget may not help to save the situation. How do you come up with a budget when your income is not fixed? Don’t spend money that you’re unsure of. You may end up looking for options of debt relief Innisfil because of overspending. What may come as a surprise is that people with irregular income are also able to live a very financially secure life. You just need to do a lot of careful planning when you have a fluctuating income. We will show you a practical way to manage your irregular income.
List all your expenses
First things first, you need to list all your expenses. This includes your daily, weekly and monthly expenses. There are expenses that occur regularly such as rental cost and you have to cater for them. There are others that can be harder to identify because they don’t occur very regularly but you still end up spending money on them. To get an idea of where your money goes and budget for it, take your credit card and bank statements and analyze your spending habits. Also, you may want to be writing down everything that you spend your money on. It will really help you to keep track of your expenses when you look back and see where your money goes.
Calculate your average income
It’s very important to understand what your overage monthly income is. You can get an idea of how much money you make on average by looking back at your irregular income for say, the last 12 months. If this amount is too low, consider lowering your expenses to make the budget fit. This will ensure you are able to save during the bad months when you don’t make as much as you expected. Consider opening a savings account for your income tax payments if you are self-employed.
Open a holding account
This strategy works particularly well for students. You simply open a holding account that allows you to get a specific amount of money every month that will help you meet all your obligations. The rest of the money remains in the account. This means that in the months when you’ve made a lot more, the holding account will have a higher balance. A holding account will help to prevent spending your money all at once.
Create two budgets
One trick that works incredibly well for those with fluctuating incomes is creating a budget for the good times and another for the harder months. This is harder to manage because some people still spend money in the leaner months because they expect to earn more again. What happens is that some people end up taking credit to supplement the harder months which in turn results in a cycle of debt. Applying for debt consolidation Innisfil can get one out of debt but they must find better ways to manage the money.