How can I budget with irregular income?

How can the budget if your income is irregular?

Say you are an independent contractor, or you are independent from the other. You do not get regular checks every two weeks. Instead, get the payment random irregular intervals.

A few months make twice what you did last month. Other months, to make half of what you did last month. How the hell can a budget with all this randomness to keep in your life?

Here are some tips to help you budget, despite its irregular income.

Step one: Look through the records of his last two years of income. What is the money you have made in a given month? What is the less money you made in a given month? And what is the average?

For now we will focus on less if you have made in a given month.

Step two: Use these sheets to a system based on the minimum that you can arise in a month in the last biennium budget.

What was the least that he has done, you can assume that the majority will be in the future a little more than that each month. But you have your budget all you have done to support keep a safety margin.

Perform all of your expenses - including fixed and variable costs - and see if you can make it fit into your budget, based on the minimum you won in a month. If you can not, then start a list of your expenses for the most important to least important.

This worksheet will help you go through your needs. The needs are by definition the most important items on your list. Include food, housing, electricity, water and other things that you could not live without reasonable.

Discretionary items, on the other hand, spending less on your list. These are the prices that is cut when you try to fit your budget your income will be.

Step Three: Create a plan for your money "excesses." Remember, you are on the minimum they have acquired in the last two years, the budget is based. If the other 23 months are signs, you will earn more money in most of the time.

Create a plan of what you now with that extra money to do. Otherwise there is a risk of blowing through you.

Would you like to save money to buy your next car with cash? Want to open savings funds for the education of their children? Do you want a large retirement account that the money to pay the debt to create or set?

Determine your goals and put all their excess money to her.

Step Four: When the check comes, divided according to their budget categories.

Let's say you created a budget in five categories. You have decided that you are willing to put their money on housing, 15% profit on debt spending 35%, saving 10%, 15% for transport and 25% on everything else.

If you get a check from a customer, immediately share the check in the appropriate categories (after the first cancellation of the corresponding income tax). You can even cash the check and the money in envelopes, so you use an envelope budgeting strategy.

Parts of each check that is the case, you can ensure that your budget is with their ideals percent Aligned. In other words, you will not risk it, 50% of the money for discretionary items, and there is not enough food.

Step Five: Create a large cash cushion.

If you have a fixed income "cash cushion" is your best friend.

By maintaining a balance of several thousand dollars on your account, you have the flexibility to deal with months, when customers pay slowly.

A bankroll is different from an emergency fund. The pad is only there to make sure that you pay all your bills while waiting for sporadic and irregular incomes are in your mailbox. However, the emergency fund is a separate account that can not be touched, the worst case unless developed.