Learn to Budget with a Variable Income

It seems like most people have dreams of leaving behind their day jobs for the life of a freelancer or entrepreneur. Not only does freelancing give you flexing room and complete control of your work schedule, but it also allows you to work from the comfort of your own home in your most comfortable clothes! Even though all of those perks are amazing, there are a few things that make going into an office worthwhile, like:

• 401(k) benefits
• An insurance plan
• Free coffee, snacks, and even meals depending where you work
• Friends that you get to see often
• A stable income

Last year when I began my journey as a new freelancer, I was making more or just about the same and it was easy to predict what my income would be. This year, as I’m an older and wiser freelancer with multiple clients, there are a number of factors that affect my overall budget–like how long it takes any given client to pay me for my services–and they’re factors that I can’t control. Luckily for me, my budget doesn’t usually vary too much from month to month, but there are times when things change up unexpectedly. In those harder times, knowing how to budget with a variable income proves to be most helpful. Find out more tips and tricks to further utilize a budget with a variable income below!

Zero-Sum Spending

Zero-sum budgeting is one of the best ways to budget with a variable income. You may have been utilizing this kind of budget plan without realizing it! It works best for those trying to work out of debt or save for something big. To create your own zero-sum spending budget, you’ll first start by listing all of your expenses. Once you’ve got them on paper, you budget for those expenses with your available funds and the excess money goes to savings or whatever big purchase you’re trying to make.

• Make sure to spend where necessary first and save as much as possible. Making every dollar support a bigger purpose is very meaningful when you work for yourself. Of course it’s nice to get something “just because” every once in a while, but you always want to keep your financial future in mind when designing a reasonable budget with a variable income.

Checking Account Chunk

Sometimes figuring out a budget with a variable income and available balances and how much you need to have in your account at any given time is too tedious. Make it easy on yourself by doing it once! Add all of your monthly expenses together and always keep that amount in your account as a base line of sorts. That way, even after paying for your rent, you’ve still got enough available to pay the rest of your bills if something bad were to happen for you financially. If you ever have to take out of your account for an expense beyond your monthly ones, that’s completely fine: you just have to work to replenish your base line amount to stay in a safe and comfortable place.

Having a few “back up” savings accounts will also prove to be useful so that you can send money you intend to save off to those spots. You wouldn’t want to be tempted to spend by having it sitting around in your checkings account. Having a base line limit in those savings accounts is also a very good strategy. Those back up savings accounts can also work as emergency funds. If ever something major was to happen and you needed money quick, you can turn to those savings to get you through the rough patches. Setting lofty savings goals and holding yourself to them will be best for you in the long run. It’s always fun to spend when you have it, but the times you need it are the worst when you’re without.

Planning out a budget with a variable income is not easy, but staying accountable and honest with yourself will make for less headaches and stressful situations. If you can keep all of your active accounts well-stocked and at their base line limits, you can breathe easier knowing that you have security if ever anything was to happen.

So, now you’re better prepared for making a budget with a variable income that gives you realistic challenges and rules that you can uphold! Working for yourself on your own terms as a freelancer or entrepreneur can be trying and tiring at times, but if you have to tools to make it work for your situation, you won’t regret that you took the plunge. And if you ever have a slow couple of weeks, the new tips you’ve learned for sustaining yourself through the rough times will keep you afloat for longer than you might realize. If you didn’t think it could be done, now you know it can.