Many people who work have no concept of the type of labour they will be doing on a month-to-month basis. A pandemic hasn’t exactly made things better. A different approach than usual is needed. We look at living with changeable income.
Deal With What You Know
The amount of money that you receive each month may be unknown to you, but you must be fully aware of what is spent. The best place to start is right here. So take a seat and list all of your typical outgoings. All out-of-pocket costs for travel, lodging, meals, bills, rent or mortgage, council tax, insurance, and other regular outlays will be covered. This helps with budgeting and enables you to determine how much money you’ll need to make each month in order to pay for these costs.
Priorities
Paying the essential expenses must be a top concern. Food must undoubtedly be arranged on your table. In addition to additional taxes and costs, failure to pay bills might result in the loss of gas or electricity. The difficulties brought on by debt and a lack of funds are only exacerbated by this. Multiple accounts could be advantageous. You can pay bills and other expenses from your second account. This implies that your payments are always made on time and that you don’t need to use it for other expenses.
Living With Changeable Income – Planning
Giving the advice to “always assume the worst” is gloomy. Nevertheless, it is a necessity for those whose income varies substantially. Start with the month that produced the least income. Determine how much money you’ll need to set aside from that income to pay your bills, and then make plans for the months when you’ll have more. Make a decision about how best to spend that money throughout those months. There are various possibilities, including paying off debt and saving money for slower months. You might like to take a different path and determine annual revenue. You can make plans for how to pay for basics if you think your yearly income will remain constant.
Think About The Future
Particularly if you are self-employed, seasonal income variations must be considered. For certain industries, Christmas is a good time of year, but for others, the holidays are a slow time when not much money comes into the accounts. There are times of the year when expenses are higher and more preparation is required. Examples of these events are Christmas, birthdays, anniversaries, and the festive season. Additionally, individuals with zero-hour contracts may encounter changes in their employment status at any time of the year.
Living With Changeable Income – Saving
Set away some money for an emergency fund when your salary is more than usual. When that happens, you’ll have access to money that you can use when you’re in need. If you have such a fund, you won’t need to use overdrafts or incur more debt. Although you should try to save as much as you can, many financial gurus advise maintaining three months’ worth of expenses on hand. If the need arises, any sum would be helpful.
