How To Budget On An Irregular Income

Whether it’s because you’re working at home or have irregular shifts in a part time job, many of us can find that our income isn’t quite as set in stone as we might hope. With some months leaving us shorter on cash than others, building up a sturdy budget can seem impossible and when times get tough, this can be particularly frustrating. While payday loans direct lenders could be available in a financial emergency, knowing how to craft a budget is a valuable skill to have while on an irregular income, so we’re exploring further below to give you a head start.

Know Your Baseline

First things first, it’s best to work out what your baseline is every month. What this essentially means is that you take a look at your income over the past two years, and work out what the minimum you’ll earn in any one month is likely to be. From here, you can determine what you can realistically afford to pay out each month. While it’s unlikely that you’ll sit at that baseline every month, it’s always best to be pleasantly surprised with excess rather than fall short every month.

Build Your Emergency Fund

The best way to cater for a low-budget month is to have an emergency fund to cover expenses when times do start to get tough. In the months where you’ve earned above your baseline income, set aside some of the excess and put it into a savings account that you can access when you really need to. When looking for the right savings account, see if you can find one with a high interest return rate to help build up cash over time.

Live On Last Month’s Income

The best way to make sure you have money is to live off of last month’s income. What this essentially means if that each month, you’ll transfer your bare-bones budget into an account and use that in the following month. This way, you’ll have time to build up funds for the following month in advance to save potential panic if your income is particularly low.

Spend Carefully When You Do Have Money

Being on an irregular income makes it particularly important to save money even when you do have it. There are countless money saving tips online, but some of the best ways to save a little extra cash that you could put towards savings or bills really are simple. Reducing your shopping bill is a great place to start, and you can do this by opting for supermarket own brand alternatives, making a list and sticking to it, and planning your meals in advance. Alternatively, try and place a stricter budget on your entertainment spending, whether that means cutting down on your morning coffee spending or having a night in rather than at the movies.

Create Realistic Plans For Excess Funds

If you do have excess funds every month, you don’t have to put them all into savings, but calculating a budget for the rest of it can keep you from running short too quickly. If you’re saving up for a car, are looking to save up a deposit for a house or you’re even just looking to cover that aforementioned coffee habit, this is your money and you can do with it what you like. However, smart budgeting is the key to enjoying the money you have without blowing it all too quickly. Having an irregular income can often leave you feeling lost. The world seems to work on a very strict schedule that doesn’t always match up to your income, however with careful budgeting and money management, you can keep up with those all-important payments with ease.