By Lynnette Khalfani-Cox, The Money Coach®
Sticking to a budget can be tough for anyone, but especially if your income is irregular. After all, the bills don’t stop just because your paycheck fluctuates or you’re only working during certain seasons.
But just because your income isn’t exactly steady or predictable, that doesn’t mean you have to give up on budgeting or managing your money wisely. In fact, when your income is sporadic, it’s more important than ever to be prudent with your finances. To keep you on track, here are four money tips when your income is irregular.
- Get Real About Your Minimum Living Costs
If you’ve done a budget in the past, or you have a pretty good idea about your monthly expenses, you may be accustomed to a certain level of expenditures. But when you have a less-than-regular paycheck, or perhaps no income at all for a spell, you have to carefully scrutinize your bills and ruthlessly put them into two categories: needs and wants. The “wants” are the things that are nice to have, but not essential. Reduce or eliminate as many of them as possible amid your financially tight seasons. Once you remove those “wants” from your budget, you can calculate the minimum amount of money you truly “need” to live on each month.
- Don’t Tap Credit Unnecessarily
As suggested above, for most people living with an irregular income, your budget can’t accommodate the “wants” during the lean times. So don’t make the mistake of using credit cards or other loans to fill in the gaps in an effort to “afford” things you actually can’t afford — at least not on a cash basis. By laying off the credit cards during the dips in your income, you’ll avoid putting yourself in a debt hole that exacerbates your financial challenges.
- Get Financially Organized
One huge benefit of being financially organized is that you’ll spend a lot less money. Case in point: how many times have you gone to the grocery store, bought something and then got home only to realized that you already had that item? Taking stock of what you have prior to doing any spending — and that goes for groceries, clothes, household goods and more — will go a long way toward reducing unnecessary spending. But this is only possible if you’re organized and not making financial choices on the fly.
- Match Your Spending With Your Income
One of the hardest parts about having lumpy or non-traditional income is that it can seem like there’s simply not enough money to go around when you have a lull in you paycheck. One way to deal with this challenge is to actively plan to spend less — even on your needs — when your take-home pay is less robust. For example, if you have less income in the summer, think ahead to what expenditures you can shave in the summer. Perhaps you can cut your food bill by joining a store’s loyalty program, making good use of coupons or forgoing meat on certain days of the week. When it’s so hot in the summer, your family may be fine eating more salads and lighter meals anyway, instead of heavy meat-based dishes. Or maybe your utilities can be reduced by you making small, but powerful, changes around the house. Unplugging appliances like your toaster, coffee maker or blender when they’re not in use will cut 10% off your energy bills. Also, taking more showers instead of baths will shave up to 50% off your hot water costs.
The point here is: budgeting is doable, and all of the tips above can help you when you have irregular income. That goes for teachers and others working seasonal work, as well as people with fluctuating hours, commissioned salespersons, or anyone with a side hustle or part-time business.
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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or BALANCE counselor who can help tailor a solution for you.
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