Budgeting With a Variable Income
Are you feeling defeated when trying to budget because your numbers are never the same? Well if that’s the case you are not alone. There are so many people that are trying to figure this same thing out. The United States is full of people who are self-employed, working on commission, freelance, and/or picking up side hustles. You can learn to manage your money and your budget with an irregular stream of income. Yes, it does look different than a budget that has a steady income, like those that work the same amount of hours weekly and others in salaried positions.
When setting up a budget for variable incomes start by figuring out your numbers. Look at a year of income and determine what the lowest amount you brought in for a month was. You also want to know the highest amount. Is there an amount you can see as a pattern? When you have your numbers clear to you then you can start to lay out a budget that works for you. Here are some tips for how to budget with a variable income:
List your lowest monthly income
List your expenses. Start with your necessities at the top (Food, shelter, transportation, and utilities).
Subtract your expenses from the income.
If there is more money going out than coming in this is a red flag.
Move the bottom of your budget to the end of your money. So that the total is zero dollars left.
Then have the rest of your budget under that. If additional money comes in, you pay for the next item in your budget that is past the line.
Track all your expenses and do it regularly to know where you are at with each category.
Make adjustments as needed every paycheck.
Then make a new budget before the beginning of each month.
Okay I know that is hard to understand even if it is in bullet points or I say it you. It takes practice and grace with yourself. Budgeting is a skill that takes practice, grace, determination and follow through. It takes most people 3 months to really figure out their budgets and build the habit of doing it. So be patient and persistent because trying to figure out budgeting on an irregular income can be even more challenging. I think the most important things to remember when doing a budget for a variable income is that you start low and add actual amounts later. Also make your adjustments when you add the actual amount from payday. If you made more than planned you have a couple options, add the money to the items in your planned budget that have no money allotted to them or planned low amounts. Next option would be applying this unexpected amount to any debt you have to help pay it off faster or build your saving. If you unfortunately make less than you had planned subtract any planned money from the non-essentials categories. If you can master these parts of budgeting it will help you be successful. If you want more help with budgeting please join my 3 day challenge.
