Budgeting

How to Budget When You Have a Fluctuating Income

Having a fluctuating income means that you don’t have a steady base paycheck that you can expect every month. This might apply to you if you’re a freelancer or someone who works various jobs here and there. While you may have the freedom of working when and where you want, you’ll also need to be savvier when it comes to budgeting your finances and making sure you don’t overspend. These are some of the best ways to budget when you have a fluctuating income.

Estimate a Base Rate

This will be the bare minimum budget that you need in order to survive. If you’re someone who has a steady rent rate and spends the same amount at the grocery store every week, then this should be straightforward. However, if you’re traveling abroad, this will be a bit trickier. You’ll have to estimate your accommodation and food expenses based on the average of the country you’re living in or country you’re traveling to.

Figure Out Your Expenses

Set up a plan that allows you to see how much you spend on food, accommodation, transport, and anything else per month. Once you have a good estimate on your expenses, it’ll be easier to set aside a certain amount of your income every month for this. For example, if your expenses are $500 per month, then you should always have at least $500 excess set aside for these expenses.

Have a Savings Account

It’s always a good idea to put a certain amount of your income into a savings account every month – even if this amount is only 10 percent of your income. That way, you’ll always have enough saved for an emergency, should it be a medical or financial emergency.

Set Up a Payment System

If you have a monthly rent, mortgage, or car payment, then you should set up a payment system for this. A good way to do this is to set up your bills for automatic payment on the first and 15th of every month. That way, you’ll never miss a payment and ensure that you’re making your payments on time to prevent the accumulation of debt.  

Save the Amount that Rolls Over

If you’re making a significant amount more in one month than the next, then it’s a good idea to let the difference roll over to the next month. Save the excess amount and spend as bare bones as you can to avoid any discomfort that will come with not having enough money to spend.

Pay Yourself

Whether you make $200 or $2,000 in a month with your fluctuating income, you should always pay yourself a steady salary. This means that you should always keep a certain amount for yourself that’s excess. This will be simple if you have enough income that’s rolled over from previous months. It’s okay to treat yourself once and a while with the excess income!

With the freedom that comes with a fluctuating income also comes the need to prepare yourself for anything that comes your way. If you estimate your base rate, figure out your expenses, having a decent savings account, save your roll over, and pay yourself a salary, then you’ll have enough financial freedom to live as you want to and do all of the things you love.

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