Budgeting for Fluctuating Incomes : TSG Financial Strategies, LLC

Budgeting for Fluctuating Incomes

For those who have the freedom to run their own schedules and work for themselves, they also have the pressure of not knowing what their income will be each month. While running your own company can be glamorized these days, there’s a lot to consider before you take on the title of CEO.

If you have a position where your income isn’t set each month, such as sales, small business owner or freelancer, then sticking to a budget is more important than ever to ensure you’ll be able to pay your bills each month. We have five strategies that will help you establish a budget and stick to it.

Here are tips when budgeting for fluctuating incomes:

  1. Always know your baseline

    Figure out what your bare minimum number is - meaning at your lowest, what do you absolutely need to be making to survive? This means, pay all necessary bills, pay for groceries, have a roof over your head, etc.

  2. Figure out the exact cost of your other expenses

    Next, you’ll want to add up the cost of all your discretionary expenses, such as subscriptions, hobbies, eating out, etc.

  3. Live on last month’s income

    Deposit the money you know you’ll need at the start of each month into your regular checking account - and nothing else. Then, deposit the money you make into your savings. By living on last month’s income, you end up budgeting your month based on real numbers, not simply projections.

  4. Pay yourself a salary

    If you revisit number three, you’ll see this is what you’re doing. You’re paying yourself only what you need, which in turn will help you save more.

  5. Pay your bills based on #3

    This “zero-sum budget” or living on last month’s income, will help you to pay your bills according to what you set up and walked through during the first few steps. And if you have leftover, put your extra funds to use by paying off debt, saving or investing them.