An Even Budget From A Variable Income
If you are one of the many people these days with a variable income
, either because you are on periodic shutdowns, temporary layoffs, or cutbacks in working hours, the irregular pay cheque can really throw you for a loop. Taking irregular income and evening it out takes resolve, but it can be done. Here are some tips to help you get through the lean months, not overspend when you are flush, and get cash set aside for when you really need it.
First, go back through three to six months' worth of your finances. Figure out what bills you owe, and when. For example, do your utility bills only come every second month? If they come due during one of those layoffs, that can make for a rough month-and possibly an unpaid bill-if you haven't set aside money for them. You want to use the past several months' financial history to tell you how much you need every month to make ends meet, and avoid unexpected surprises like the electric bill.
Next, open a savings account, if you don't already have one. In those higher earnings months, set aside the extra money earned to bail yourself out during layoffs, or shorter working hours-whenever your pay cheque might be short. It's always tempting to treat yourself to something special when you have a few extra bucks in your pocket. But you'll feel a whole lot better if you don't, and then, when the bills come home, you have money in your pocket to pay for them.
Here's the hardest part. Set money aside from your higher paycheques until you have one month's worth of bills and living expenses in your savings account. This may not happen overnight. It can take six months or even longer, to get this kind of cash together. But, if you can set aside a month's worth of expenses into your savings account, then you can start living from the savings, and not pay cheque to pay cheque.
Since you know your monthly costs, you transfer only that amount into your chequing account. In the months where you make higher pay, that extra money stays in your savings account. In the lower pay months, you use those savings to ensure your bills are paid on time, and in full.
Setting up this kind of system takes time, and discipline. But it's worth the rewards of not having to fear a layoff, shorter hours, or forced vacations.
by: Molly Wider
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