How To Budget When You Have Irregular Incomeposted on 5 August 2011 | posted in General Category | ( 0 ) CommentsEveryone says that a budget will make managing my money easier. But what if making the budget is the problem? You may have written up more budgets than you can count, but maybe the problem is that your income is never the same. So what can you do to budget with irregular income? Not everyone has a steady job with a steady wage. You may have a few different jobs, seasonal work, be self-employed or you may be on commission. Even though you don't earn money on a regular basis, you can plan carefully to spend on a regular basis. If you are self-employed, part of the planning process must include a separate savings/bank account for income tax payments. 3 Budgeting Strategies to Get You StartedBudget Using Your Average IncomeIf you have had irregular income for a few years, one strategy is to calculate the average net income you've had per year for at least 3 years, divide by 12 and use that amount to build your current monthly budget. If this amount is not enough to meet all of your expenses, you must consider how you can supplement your income on a regular basis or decrease your expenses to make your budget balance.Budget Use A Seperate Bank AccountAnother strategy is to set up a seperate bank account. All of your income, including tax refunds, bonuses, etc., is deposited into the seperate account. You pay yourself a monthly amount based on what you have identified you can afford and what will allow you to meet your obligations. During months of higher income, this other account will have a larger balance. During the leaner months, the balance will decrease. However, the amount you pay yourself does not vary from month to month.Use Two Budgets: One for Good Times & Another for Leaner TimesA third way to deal with irregular income is to have two budgets, one for the better months and one for the leaner months. For most people, this is the hardest way to manage their money effectively because it's easy to get into a spending habit during the better months and then feel deprived during the leaner months. Some are then tempted to spend because they expect to have money again in the better months ahead and they use credit to supplement their leaner times. As a result, they develop a debt cycle and spending habits that become expensive and difficult to break.Taking the time to develop a budget will not only make it easier to manage your money, it will leave time for you to enjoy the fruits of your labour. (Author: Darren Perks) Share this blog entry:
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