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How To Budget on a Fluctuating Income

How To Budget on a Fluctuating Income

There are quite a few people out there that will have an irregular income stream. From those that are self-employed, those that are salespeople, those that work on contracts and locations change (like fly-in-fly-out FIFO workers), as well as freelancers, and those on secondments or internships. One month could be really lucrative, especially for performance-based wages, and others could be really slow where not much work comes in. Some industries have work that is pretty seasonal, and this all plays a part.

Calculate Your Baseline

Before you start out on creating a budget for someone that gets an irregular income, you need to know what the minimum amount of income is that you would need per month. So work out what bills you have (the necessary ones at least, rather than gym membership and so on), and your living costs (like mortgage, rent, insurance, food, fuel, and commuting costs). When you know what the bare minimum is that you need to earn each month, then you can make a plan to always generate that amount of income (or you can rely on a base-wage if it is something like a sales-based role).

Discretionary Expenses

If you want to reduce the stress that your finances and irregular income bring to you, then you need to know where the gaps in your spend are. Do you waste a lot of money on eating out or travel costs? Do you spend more than you should on your hobbies? If you can take a cold, hard look at your spending then it does make a difference and you can be realistic about what you do or don’t need, or what could be covered at the times when you are earning more.

Build Savings

It can be tempting to just spend, spend, spend, on the months when your income is much higher than normal. But there could be some months, where you’re unable to even earn your bare minimum requirements. So it is such a wise idea to make sure that you are generating savings so that you have something to use when you need to. It can be a good idea to just send an amount straight to a savings account when you get paid, just so that it is out of sight and you won’t spend it on other things. Savings are important for all people, but never more important than for people that earn an irregular income.

The thing with an irregular income is that you just don’t know what will be coming in each month; some months will be better than others. You may have a base wage that you can rely on, but someone that is self-employed wouldn’t have that. So the stress and the budgeting can be a real struggle. So to join in with spending awareness tips for FIFO workers, here are some extra tips for those that have an irregular income, to help you to budget and to save. Hopefully, this will help make a difference; being stressed about money doesn’t have to be a thing when you plan carefully.

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