How to Budget on a Variable Income
Figuring out how to successfully manage your money isn’t always easy.
You know that you need to put your “needs” before you wants, and plan for the future, but when you have so many bills to consider, it’s easy to end up feeling confused, overwhelmed, and panicked by your cash situation. Throw the uncertainty of a variable or commissions-based income into the mix, and you can end up feeling even more distressed.
The good news is that it is possible to create a reliable income that handles the stress and confusion of working for a different amount of cash each month. Today, we’re going to share some of our top tips to get you on the right track.
1. Create a Bare Bones Budget
Usually, the easiest way to live on a variable income is to start by figuring out exactly how much you need. This means figuring out what you have to pay for each month, such as food, mortgage bills, rent, and other essentials. Ignore your “other items” for the time being. Once you know how much money you’re getting in the month, you can think about how you’re going to use the extra cash that’s left over when your bills are paid.
Remember, in an ideal world, at least a portion of your cash should always go towards savings. Though it’s tempting to spend everything you earn on the things you want right now, you’ll thank yourself for having some cash in a reserve later.
2. Get your Priorities Straight
Your bare-bones budget will give you an insight into the things that you can’t afford to compromise on when you’re planning your expenses. However, with a little luck, you should have a bit of money left over when you’re finished spending, and this is the money that you’re going to use on yourself, and your future. Create a list of the things that you usually buy that aren’t linked to the “essentials”.
This might include things like clothes, fuel for your car, and even extra food items that you won’t buy unless you earn enough one month. Think about what matters most to you and look for ways to cut down in the other categories. For instance, you might want to start by putting any spare money into your savings, then focus on your clothing and cosmetics funds.
3. Know When to Get Help
When you’re living on a variable income, there are going to be times when you need a bit of extra help with your cash. For instance, you might have a leak in your roof or a problem with a huge bill that you need to deal with straight away. This will mean borrowing some money in the form of a loan or a cash advance.
If you do get a loan, make sure that you pay it back as quickly as you can. Focus on paying back more than the minimum just in case you have less money to work with in the months to come. The quicker you can get rid of your debt, the less you’ll need to worry about it. Additionally, make sure that you take the time to compare your options online and ensure you’re getting the right deal on your loan too.
4. Plan for Emergencies
We mentioned above that once you’ve finished paying for the essentials with your income, your next step should be to put as much cash as you can into your savings. This doesn’t just include your savings for future goals like buying a new house or car. You also need an emergency savings account that you can use when unexpected expenses come your way.
Whenever you have a good month where you end up with more money than usual, don’t just use that extra cash to treat yourself, put as much as you can into your savings. This will give you some much-needed peace of mind later.
5. Supplement your Income
Finally, if you’re concerned that you might not earn enough cash to make ends meet with your current career, then you might need to look into ways of supplementing your income. This could mean looking into freelance jobs that you can do online in your spare time, or just taking on an extra part-time job where you know you’re getting a stable amount of cash every month.
Supplementing your income will give you something else to turn to when you have a “bad month” with your variable income career.« Quick Tips to Reduce Your Financial Stress This Month How to Recover Financially After Coronavirus »