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So budgeting can be tough for anyone. That’s a fact.
But budgeting with inconsistent income is even more uniquely hard.
If you have a job where your income ebbs and flows — I’m lookin’ at you bartenders, servers, waitresses, business owners, artists, freelancers, etc. — rest assured. It is still possible to go about budgeting with inconsistent income.
As someone who’s had a variable income for the last three years I can tell you it’s not always easy, but it is certainly doable. Here are four budgeting and money saving tips for people with inconsistent income:
1. Live Like You’re on Your Last Dollar
You don’t have to live cheap forever. Just long enough to grow a substantial amount of emergency savings in your account. Emergency savings is key if you have inconsistent income.
This is money that you’re going to need to fall back on if/when money isn’t coming in. To be frank, there will most definitely be periods when the money faucet turns off. Prepare for it.
Reel spending back in areas that you have control over like how much you spend on groceries and extra things. Again, I want to stress veeeerry strongly that cutting back on this stuff is only temporary.
You don’t want or need to remove everything that’s fun in your life forever. In fact, that can impact you + your wallet negatively.
But a few months of sacrifice could be all you need to feel secure. And it can help you feel less anxious in the future about having variable income.
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2. Create an “I’m Not Playin’ Games” Type of Budget
When you create a budget there are many budget categories. There are fixed expenses which are the ones that don’t change from month to month.
Usually, you have very little control over these expenses. This includes your rent, phone bill, etc.
Then there are variable expenses that you have some control over like your utilities, groceries, entertainment, etc.
The “I’m Not Playin’ Games” type of budget is one where you go very, very slim. It’s a budget where you only include things that are immediately necessary.
A budget in it’s simplest form is your income minus expenses and goals.
When your income is inconsistent, you need to be highly realistic. The best way to go about creating a budget is considering the very minimal amount that you can possibly make each month as the starting point of your budget.
If you overstate your potential income and then miss that mark, your finances can become totally out of wack. When you’re creating your budget write down your income as the very least you can possibly make and go from there.
Another note is to make sure you’re always considering your income (cash, tips, etc.) as the after-tax income. You don’t want to get stuck at the end of the year owing a crap ton of money that you don’t have because you didn’t pay quarterly taxes or set enough money aside.
Trust me, that sucks.
If you’re new to the whole budgeting with inconsistent income thing, I can teach you how to set up a budget real quickly here.
3. Don’t Manage Money Like You’re in the Depression Era
Servers, bartenders, and other artists can deal a lot with cold hard cash. Cash transactions are fun because you see the paper money flowing your hands. (Dolla, dolla bills y’all!)
However, be very cautious of how you manage your cash. I’ve known a few servers and bartenders in my day and they liked to keep actual cash under the mattress, etc.
While it was kitschy and a fun talking point, it wasn’t so fun when all the money got stolen by a random person. The bottom line: People know that bartenders and servers deal with cash, so keep it safe.
By no means am I saying to put all of your money in an account if you prefer cash. Just think carefully about keeping your life savings sitting around in your home.
4. Set Your Bottom Line
I got this tip from Jen Sincero recently after reading You Are a Badass at Making Money: Master the Mindset of Wealth**. She suggests having a base line in your bank account to never dip under.
Budgeting is important, for sure. But if you’re not someone who’s super organized and having a tough time budgeting with inconsistent income, use the balance in your bank account to set your limits.
She suggests having a bottom line like $500, $1,000, or $2,000 to never go under. Then raise your bottom line as you increase your income and savings. This way if you see your money approaching the base line you know to get motivated to either bring in more money or to avoid spending.
If you haven’t read the book You Are a Bad Ass at Making Money, I suggest you read it ASAP. This book has been life-changing for me. If you prefer audio over reading, you can sign up for a free Audible trial to get the book.
Seriously, if you have any trouble with your perspective about money or attracting money read this book.
Budgeting with inconsistent income isn’t easy. I don’t want to front and tell you it’s a walk in the park, but it can and should be done.
Actually, when you have variable income budgeting is probably even more important. Budgeting and saving will help you make sure you don’t run into a situation where you’re flat broke when no money is coming in.
Want more money tips? Be sure to check out these posts:
- How to Save Money When You’re Broke as Hell
- How to Repay a Massive Amount of Debt With a Zero-Sum Budget
- 107 Things to Do Instead of Spending Money
- How to Cut the Crap and Start Saving Money Now
If you need help creating your budget, give me an hour and I can help you create one here.