A variable income is any income that changes from week to week. As such, it may be difficult to decide how to spend the money you have when you are unsure about the amount you’ll get in the coming weeks. Here are some tips to help you manage a variable income.
Give yourself a weekly allowance
- Obviously, the more cash you receive, the more you have to spend. To create an allowance, calculate an average monthly salary. Afterward, subtract any recurring monthly expenses. Divide what you have left by five. Dividing by five allows you to tuck a little money away each month for emergencies.
Create a holding account
- A holding account saves your money until you’re ready to use it. You’d place all your money you earned during the month in the account. Then, at the end of the month, you’d pay yourself a salary out of the account. That way, you are getting the same amount of money each month.
Create a budget that works for you
- There are many ways to budget your money. Two basic forms of budgeting are a bare-bones budget and an average budget. A bare-bones budget includes only the necessities. This may include things such as rent or mortgage, utilities, any minimum payments on debt, and a small amount for groceries and gas. A bare-bones budget gives you a minimum amount you must earn each month. An average budget is based off of what you typically spend on things when you earn more than the minimum needed for a bare-bones budget. Budgeting software can be used to make budgeting easier.
Continue to save
- With a variable income, you never know what the next month is going to bring. Make sure that you are putting aside money each month to pad any bad months and putting away more money when you have a more prosperous month.