Budgeting on an Irregular Income

The great thing about a budget is, it keeps us on track, right?  I have come to feel like a person without a budget is like a car being driven by an 8 year old!  Scary!  I only know that from experience, unfortunately.

What about when there is not a steady income?  Here is a small article that I submitted to the Random Sampler in the Ensign magazine a couple of years ago about budgeting on an irregular income:

“Random Sampler,” Ensign, Mar 2007, 72–73

Budgeting on an Irregular Income

Katie Stone, “Budgeting on an Irregular Income,” Ensign, Mar. 2007, 72

One of the hardest things my husband and I have encountered while being self-employed is maintaining a budget. With a fluctuating income, it can be a challenge to plan for expenses. For us, the key to successful budgeting is creating a “steady income.” We do that by depositing all net income into one account and paying ourselves a monthly household salary, a median of the highs and lows. In other words, even when the previous month’s income was high, we maintain an average income, thus leaving enough to cover the low-income months as well. To successfully track our spending, we have established a detailed spending plan that includes all our fixed and periodic expenses. We also maintain a careful savings plan. The saying “don’t count your chickens before they’re hatched” is especially relevant when you are self-employed. You cannot spend what you make month to month. You have to look at the overall picture and set a budget plan within fixed parameters.
Katie Stone, Utah

Related Posts by Categories

Widget by Hoctro | DreamyDonkey