Everyone talks about how hard it is to budget and survive on a fixed income such as after retirement but a harder income to budget is a variable income. If you are self-employed, work as an influencer, do gig work like Door Dash, or have another form of variable income you need to really focus on budgeting in today’s economy.
Variable income is hard because in some weeks and months you will do much better than others. Some of those weeks and months you may n0t earn anything at all. These tips for living on a variable income will help.
Build a stockpile
A stockpile in your home of food, cleaning supplies, personal care items, and other things you go through constantly is a great way to save money and make sure that even on a rough week you never have to worry about not having things you need.
Start slowly by using sales to build your stockpile. You can start a stockpile even if you do not have a lot of money from day one. As each shopping trip happens your stock will grow and your expenses will go down.
Keep a running list of expenses
One of my favorite ways to stay organized on a variable income is to have a list of expenses both for my business and for my home. This list is kept updated with the name of the expense, the exact amount, and the due date I need to be mindful of.
This can be done in a few simple ways. You can keep a single list and move your expenses down the line every time you pay them so they are ready for the next month or you can opt to keep a page for each month in your notebook or an accounting ledger.
This allows you to see at a glance what has been paid and what still needs to be paid so you can pay things off as the money comes into your hands or move the money to an account for your auto pays.
Pay down debt
When you find that you have the room in your budget make extra payments to bring down your debt. This is one of the best things you can do to save you money on interest and to eventually open up money in your monthly finances so you have less to worry about on your variable income.
One of the best things you can do to open up money in your everyday budget is to focus on getting rid of payments. When you pay something off revolving credit like a credit card set it to the side but do not close the account to help build your credit.
Try to get ahead on bills
If you are not living paycheck to paycheck and find yourself wondering what you should be working on to help get ahead when you are dealing with a variable income.
Taking the time to pay a bit extra on your bills when you have the funds or to pay your bills early when you have the opportunity can be a great way to ensure that you do not have to worry about whether or not you can afford to pay your bills.
A great example of this is paying a little extra on your power bill over the summer to help lower the cost in the winter.
Build an emergency fund
An emergency fund is one of the single best things you can do to help make it easier to manage a variable income.
When things like a blown tier happen to someone with a fixed or reliable income it can be a disaster when they do not have an emergency fund but it can be even worse for a variable income.
Keep a hills and valleys account
One great way to help deal with a variable income is to keep a hills and valleys account. This account is one that you add money to on months that you are doing better financially and store the funds until months you do not do as well to help make it easier to deal with the rougher months.
This will help you handle small emergencies even when you do not know when more money is coming like those on a fixed income or getting paid bi-weekly.
This account is great for adding money to during the 4th quarter when income is drastically up for most small businesses to ride out the first quarter when everyone tightens their belts and earnings for most people are down.
Be wise with credit
Credit can be a great asset. It can also become a trap that can be hard to get out from under. If you chose to utilize credit be smart about how you use it and be sure to keep up on payments.
For the best results try to make extra payments to pay off your credit faster. This will reduce how much interest you re paying and help keep you from losing money that could have been utilized in other ways.