Whether you’re a freelancer, have a casual job, or are a student, not earning a steady income can prove challenging when it comes to getting your finances in shape. A successful budget normally depends on a steady income and good planning. So, how can you budget when you don’t earn a steady income?
Know what your biggest spends are
When it comes to creating a budget, you need to know what your biggest outgoings are. If you earn a steady income, you can allocate a specific amount for each of these. When you don’t earn a steady income, you need to consider how much you’ll need to cover these costs. The first thing you need to contemplate is your groceries. Consider the lowest cost of your supermarket spends – this includes all the basics you’ll need for the month ahead. Don’t take into account any other food items like coffee shop spends or takeaways. Try to be realistic about the amount you’re going to be spending – if you’re not sure of how much you’ll need, try to track your spending for a few weeks.
You also need to factor in any household bills and other outgoing payments. Consider the minimum payments for your rent, mortgage, phone and any credit cards. If you work from home, you’ll need to add internet bills and electricity on top.
Finally, consider any other costs. This may include transport (whether you travel on public transport or own a car, you’ll need to come up with a minimal amount for this), medical costs, such as prescriptions, and any other outgoings that may arise- it may be worth delegating an amount for surprise outgoings.
Know what your goal income is
Now you’ve established a budget, you can work out how much you need to earn for the month to cover your outgoings. You’ve probably realised that budgeting when you don’t earn a steady income works in reverse to budgeting on steady pay. This method makes it much easier to determine your finances and ensure you have enough money for your overheads. While it can be challenging to ensure you’re earning enough money per month, its advisable to put any spare monthly income into a savings account. That way, if you don’t earn enough to cover your budget, you’ll have a back-up plan to assist you.
Open separate bank accounts
To keep your finances organised, it’s best to open separate bank accounts. One account will cover your savings, while your other account will cover outgoings for bills, groceries and other spends. Finally, open a business account for your incomings. From this account, you can make two transfers per month – one to cover your outgoings and one for your savings account. If you wanted to separate your savings into lifelong savings and a back-up fund, you could always set up two savings accounts – an ISA or high interest savings account can give you a better deal on long-term savings.