Some people do not get a steady income like sales people, freelancers or people who are self-employed. They actually face lot of problems due to fluctuating incomes. It is a nightmare to plan a budget when you have no idea about how much you are going to earn each month. This is a serious problem for those who work on a commission basis or are self employed.
The income they get depends entirely on their monthly sales or projects they get. Well, if you are among those who earn a fluctuating income and find it really difficult to plan a budget, then read on to find out how you can still plan a budget.
Identify the minimum amount you earn
Before you start creating a budget with fluctuating income, you need to identify the minimum amount you earn. Also, determine your minimum expenses on a monthly basis. For all those who earn a fluctuating income, plan their budget keeping in mind their expenses related to basic necessities like house mortgage or rent, groceries, utility bills, groceries, childcare, transportation etc.
While following any budget plan it is really important to find out how much you need to make to bear your bills. But, in this case this step won’t work as the income is not steady. To create budget for fluctuating incomes just write down the list of essential things and monthly expenses on a paper.
Out of the expenses you have listed there are some fixed expenses like rent, mortgage etc. Now, try to figure out the expenses that change. They can be grocery bills, travelling expenses, utility gas etc. Also, write down debt repayments, savings, investment etc. You may think that these bills aren’t crucial to survive still they are quite important.
Calculate monthly expenses that are optional
After you filter out the essentials then try to list all other things. While writing down the optional expenses consider bill for cable television or any other payments you make for entertainment, hobbies, cash spent for sports or money spent to dine out.
If you are unable to find out the approx spending on non-essentials then pull out some credit card or bank statements to check. Also try to find out something that had overburdened your pocket in last few months.
Create emergency fund
In case you hold some savings already then nothing like it. It is always better to have savings of money for 3-6 months. It helps especially when you have flcutating income.
It is always better to create emergency fund to fight days when you don’t earn sufficient amount or say nothing. Savings can bridge the difficulties in crucial time.
Staying on income from last month
Once you created a budget for your fluctuating income and included your unnecessary expenses then you will come to know the amount of money you need for the month without disturbing your savings. You can deposit the money you get previous month to your savings account.
You can start putting whatever you earn in short term or long term savings whichever suits you. This helps you stay on income from last month.
Credit a salary for yourself
It is again a step ahead to how you were advised to put your money in regular savings account on the very first month. Here you will be paying salary to yourself. You may be wondering how is that possible isn’t? Think about times when you were working hard and earning a fluctuating income but here you will award yourself with a salary.
You can follow the budget for fluctuating incomes and eliminate optional spending which will save money for you. Now you will not end up spending more than earnings.
Pay bills depending upon the income you earned last month
The money you need for your fluctuating bills as well as non essentials is there in checking account. The right budget that comprises of your expenses and bills for the month is what you have now.
Now you will start paying your bills as per the budget you created that consists of debt payments or paying savings. If you need an individual account for long term savings then go for it. You can also put some cash back to the regular savings accounts every month and see how money grows.
Mark all your bids as paid and put a zero at the end
As not all bills will be due at the start of month, you need a proper system to keep track of your spending as the month passes.
Make sure you pay every bill right at the beginning of the month. Pay your mortgage or other bills in the second week of the month. If you are planning to spend on entertainment then make sure you do not spend more. Keep your bills marked as paid
It is not easy to plan a budget with a fluctuating income, but with a proper budget you can accomplish the task. While you create a budget for fluctuating budgets make sure you find ways that can help you get a steady income. Also, if you succeed to earn more in between, try to save money for the days when you either earn less or absolutely nothing. Do not rely on monthly income; try to save for 3-6 months to have a stable amount in your bank that can back you for at least a month during no or less work.
If you can find income coming from more than one source, it will help you earn a stable income or constant money incoming to your account. Try not to spend on entertainment or things that are not essential. You have to go slow and figure out things that need money on priority basis. You can create a budget plan for fluctuating income and follow it to. With little dedication and smart planning you can achieve your goals with irregular income too. It may sound bit difficult, but it works and with time you will get used to it. Any help for financial problems contact gtacredit.com or call 416 650 1100