An unstable source of income is a very popular phenomenon in the modern world and it is true for people for various occupations. You might be a freelancer whose number of clients is changing from month to month or an entrepreneur with seasonal ups and downs in profit. You might be a person working with long-term projects receiving large sums of money only twice a year or you also might be a person who actually have some fixed salary, albeit more than a half of your income still depends on the percentage of profit you are generating with your work.
All of these people should learn planning their budget as soon as possible which will help them to avoid various unpleasant situations in the future and live comfortable between the days when the income is coming. This article will tell you more about the basic steps for money management.
Switch to long-term thinking about your finances
Of course, it will be helpful for everyone to think about one’s budget from a long-term perspective, however, for the people who receive the same amount of money every months, the question is not thus acute. It is certainly good for them to have some saving for a couple of months in case of a rainy day as well as to keep a certain amount of money for expensive purchases. Still, they do not have to worry of the entire year ahead in the majority of cases.
This is not the situation when it comes to people with unstable sources of income as in their case, it is extremely important to make sure they will have enough money for all the necessities not only in two months but also in half a year.
Keep in mind your expenses and your income
An essential part of budget managing is keeping a track of your expenses. This will allow you to estimate what is the minimum sum of money you need to have for living as well as the amount of money you would like to have to be able to lead a more comfortable lifestyle.
Certainly, it is also crucial to be aware of the income, however, this is not simple for people who are not paid money on a regular basis. In such a case, you can create three possible scenarios for a month. For example, if you are a freelancer, you can estimate the minimum amount of money you will be able to earn during a month without auspicious conditions for work. This can happen if you do not have enough clients for generating greater income or you get ill and cannot work because of your physical condition. Recall the previous months when something like this happened and you will be able to understand what is the sum of money you can count on in such a situation.
Then, create an average scenario in which you have a regular number of clients and do not go through an intense illness. Think about the amount of money you can earn during such a period of time.
Finally, you can also think about a particular profitable month which might be the result of you being more active at work or because of a greater interest for your services on the market. It is not sensible to build your budget planning around such an estimation, however, it will give you some realistic view of your possibilities at work right now.
Compare the expenses and income and make corrections
If you understand the level of expenses for a month, you will be able to compare it to the amount of money you earn during the same period of time, so it will be obvious to you what is the difference between these two amount of money. Certainly, in such a way, it will be possible for you to make necessary corrections.
The corrections will be based on some particular situations typical for people with irregular income. For example, after finishing a great project which has brought you a lot of money, you might feel like you can spend more money now, however, you should take into consideration the fact you have not found a new client right now, so it is better to divide this income into parts so that you will be able to use this money for a longer time.