|Terry Rigg is the editor of the Budget Stretcher Newsletter. The
Budget Stretcher Newsletter is published monthly and is loaded with
information that will save you time and money everyday. Go to
http://www.homemoneyhelp.com for more information.
can you decide how much you have for bills and expenses when your
paycheck varies from one payday to the next? That's a question a lot
of people struggle with.
A few of the occupations that I can
think of off hand that could fall into this category are waitresses
or waiters working for salary and tips, truck drivers that are paid
by the mile and never know how many miles they are going to get, the
self-employed whose business income varies from season to
season, and the list could go on.
Trying to manage your finances with a
steady income is hard enough, but when you never know what your
paycheck will be, it seems almost impossible, but it's not. It is,
however, going to be a little more tricky.
In my Budget and Bill Organizer I
talk about averaging your expenses like your phone and electric
bills that vary from month to month. The same principle can be used
to average your income.
The first step you need to take is to
find records of your pay for as far back as you can. It would be
best if you had records going back for at least 6 months.
Take these records and total the
amounts you were paid for the entire period. Then divide that by the
number of months you have records for. This will give you your
average monthly income.
If you don't have any record of your
previous pay, you may need to go to your employer to get the
information. If there is no way to get this information, you should
start a log of how much you get paid and use this to develop your
Once you have determined your average
monthly income, you will need to develop your budget just as if this
was your regular pay.
Here's where it gets tricky. You
aren't always going make the amount you have budgeted. The only way
to handle this is to save when you make more than what you have
Here's an example:
You have determined that your monthly
budget is $2000 per month;
In January you earn $2500. You will
need to put away $500 of that money so that you can make up for any
month that your income falls below $2000.
This sounds like a simple solution to
a complex problem, but it may not be as easy as it sounds unless you're
accustomed to saving money. It will take some discipline to make
sure that money is there when you need it.
There could be a bright side to this
method. If you are able to put the extra money away and you have
several months that you make more than your budget, you could end up
with a sizable savings account.
When setting up your budget, make sure
that you don't underestimate your bills and expenses. This is one of
the major reasons many budgets fail.
By averaging your income it will
prevent the "Feast or Famine" approach to your spending.
It only makes sense to spread your income out so that you can cover
all of your bills and expenses every month.