If you work in sales or you’re self-employed, you might have income that ebbs and flows like the ocean tide, resulting in the conclusion that a monthly spending plan won’t work for you. Even without regular income, however, you can create a budget. It might be possible for you to set aside money during months characterized by higher income in order to make it through the months during which money is tight.
Make a list of your fixed expenses for the month. These are the bills you pay that don’t change -- your mortgage or rent, car payment, loan payments, savings and some utilities.
Plan your variable expenses for a month. Variable expenses include groceries, entertainment, automobile, credit cards and clothing. Choose a conservative amount for each expense -- one you think you can make work -- to enable you to sock money away into your contingency fund. You may need to adjust your budgeted amount after testing out your budget if you allotted too much or too little money.
Add up your fixed and variable expenses to get a reasonable estimate of your monthly expenses. Project income for the month, if possible. If you expect to receive pay for at some point during the month, enter the expected payments to help plan your budget. Calculate whether your income will cover your expenses or if you’ll have to use savings to pay your expenses.
Open a bank account where you can deposit any available money into a contingency fund. This fund will help you stretch your income during dry periods.
Record income as you earn it to begin to track your income. Once you start tracking, you might even notice a pattern to your income over a period of time. For example, you might find that the spring months are always lean but that you really rake it in during the summer and autumn. If you notice a trend like this, it will help you plan your budget to make it through tight times.
Keep your spending as conservative as possible, especially while you are just starting to budget. This will help you build up your contingency fund. By cutting back on entertainment or clothing expenditures, for example, you will be able to deposit more money into your contingency fund. Record every expenditure -- especially variable expenses -- to track your spending. When you get close to your allocated amount for an expense category, you’ll know it’s time to tighten your spending even more so you can make it through the end of the month.
Deposit any leftover funds at the end of the month into your contingency fund and prepare for the next month. Look over the just-finished month to see how your budgeting worked. If you had areas where you did not allocate enough money, make some adjustments. Your goal is to put as much money into your contingency fund as possible to enable you to use it for expenses when necessary.
Create the next month’s budget, using the expense amounts that you figured. If you have expected paydays coming up, enter them into your budget as income. Figure out whether you’ll need to use your contingency fund to cover a shortfall.
- "The Budget Kit: The Common Cents Money Management Workbook"; Judy Lawrence
- "$0 to Rich: The Everyday Woman's Guide to Getting Wealthy"; Tracey Edwards
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