How to manage a budget if you have an unstable income

How to Prepare for Budgeting

Before you take up the calculator, it is worth determining what financial situation you are in today and where you would like to go.

Set a goal

The first step to take before starting income and expense planning is to determine exactly why it is needed at all. Budgeting is an activity that takes time and effort. Without an understanding of what goal planning helps to achieve, this venture can be abandoned very quickly.

Financial Advisor Kumiko Love in book “Think in Money” writes that the main thing here is not numbers. If there is no motivation, then there is no point in planning. Therefore, before you start budgeting, it is worth considering what life goal the money will help you achieve.

This goal should not be formal, but one that evokes strong emotions. And which you would never refuse if you knew: you will definitely be able to save up for a dream. For example, it is very important for one to travel every summer, and to visit unfamiliar places. And for the other - to move into a spacious apartment, where everyone in the family will have their own room.

Conduct an analysis of current income and expenses

The second important step is to determine exactly how you are spending money now. For this, it is worth analyzing income and expenses for at least three months. This will allow you to see patterns that may surprise you.

You can study the history of receipts and expenditures in the mobile bank. Or start recording all personal transactions right from the beginning of the next month and keep doing this until you accumulate enough data for analysis.

This step is important: in this way you will take the numbers for the future budget not from the ceiling and not from the social networks of some financial guru. Each of us has our own priorities. Someone will never refuse a subscription to a fitness center. And someone can easily replace cardio on the track in the gym with a morning jog in the nearest park. But he will plan a manicure and eyebrow coloring, even if he has to arrange a couple of additional unloading days.

Therefore, it is worth analyzing what expenses you repeat from month to month. And which of them are you not ready to give up. And at the same time see if you are spending much more than you thought on some not very important little things. For example, a cup of coffee in the morning, taken to go. Maybe it's not important to you. ritual, but just a habitual action that you repeat automatically.

How to budget if your income is unstable

Freelancers, which carry out private orders, sometimes find themselves in a situation of instability. There may be a lot of orders and money this month, and much less next month. In such circumstances, planning is needed even more than with stable and predictable incomes.

You will need a table with five columns: one for income and four for expenses. You can create a separate file-table or prepare a paper notebook.

1. Record all receipts

This is what the first column is for.

For those who receive a fixed salary on the card, this is easier to do: it is known in advance when and how much money will come. If payments are received irregularly, it is worth writing down each. And then select two dates - for example, the 10th and 25th of the month.

Consider these paydays. And allow yourself to use the money that came in two weeks only after the next milestone - one of the scheduled dates. So there will be no temptation to immediately lower the amount received, and then remain aground.

In addition, it is always worth starting with the worst-case scenario when planning expenses with an unstable budget. That is, imagine that in a month you will receive the least income of those that were, for example, within six months.

2. Define Fixed Costs

This is the second column of the table. Here is all the money that you will have to pay. These costs are often discussed in financial planning materials.

Usually utility payments and minimum loan contributions are made in this column. But often they forget to pay for the Internet and mobile communications, as well as subscriptions to online cinemas or other digital products. And also - the amounts that need to be paid every few months. For example, it can be a payment for a sports subscription.

In addition, sometimes they do not add here taxes, because every month you can get a different amount. But for an individual entrepreneur or self-employed person, this is an important part of the mandatory expenses.

Therefore, it is worth making absolutely all planned payments in this column at the beginning of the month, even if they do not exceed a couple of hundred rubles. The amount that will be needed to pay the tax can be found, for example, in the My Tax application for self-employed. Or calculate it yourself.

And then it’s worth planning which of the mandatory expenses will be paid on the first, and which on the second “salary day”. And add appropriate reminders to the calendar.

3. Calculate variable costs

This is the third column. Everything you need for a normal life is here: food, household chemicals and household goods, clothes, travel expenses. As well as spending on sports, hobbies and entertainment.

During the analysis phase, you can highlight the costs in each category with different colors. For example, everything related to food is green, hobbies are blue, and entertainment is purple. This way you can estimate how much money you need for each category, and calculate the budget for the new month based on this information.

Plan your expenses based on the averages of the last three months so you get a realistic budget that is easy to follow. Then, if necessary, adjust the costs. For example, consider whether you can buy products in bulk and then prepare them for long-term storage.

Meat and fish can be immediately butchered and frozen in portions. The same can be done with herbs - for example, parsley and dill. And also with berries, bell pepper and other vegetables. If you do this in the summer, when prices are lower, you can save money during the colder months. And then cook soups and bake pies, using their stocks.

After you decide on the amounts, it is worth marking on the calendar when you are going to make large purchases. You can tie them to paydays.

4. Get a few "envelopes for the future"

The first two columns of expenses are necessary to live. The second two are to do it in comfort. The same column will help to prepare in advance for various events - both planned and unexpected.

To begin with, it is worth transferring all the money that remains after filling out the second and third columns to the fourth. This is how you start building an emergency reserve fund. It is needed so that you have funds if any trouble suddenly occurs.

For example, you miss a couple of work weeks due to illness. Or your washing machine suddenly breaks down. It is desirable that in this situation you have at least minimal savings. Even better, if they fully cover all costs and you do not need to take out a loan.

Kumiko Love advises first of all to send the remaining money to the emergency fund. As a result, it should be at least two monthly incomes. If it seems to you that there is too little left of your money at the end of the month and save this amount will take almost an eternity - anyway, start saving. Don't wait for revenues to skyrocket.

When you decide that the emergency fund is already large enough, get a few more “themed envelopes”. They are needed to prepare in advance for events that involve big expenses. For those whose income is unstable, this is one of the most important steps to financial security.

For example, you know that before the New Year you will spend a certain amount on present. And in the fall we would like for a few days go to the sea. In addition, the wedding of the best friend and the anniversary of dad are approaching.

Set up four different accounts at the beginning of the year and gradually transfer money to each on paydays. It is better to make a schedule in advance and mark the dates when you put money in a specific wallet. And also indicate the amounts. When the expected day approaches, you will already have savings.

5. Start planning savings and investments

This is the fifth column. You should allocate money here if the previous ones are already filled and you still have funds. Then it is worth transferring them to a separate account, so that later you can put them on a deposit or start invest. This money is the basis of your financial security in the future.

Some make a serious mistake and invest in an emergency fund. You should not do this: if force majeure happens, you need to quickly get the right amount. And it will be more difficult to pull it out of securities, and this will take time.

Therefore, do not rush. Long-term savings and investments are possible only when all your current expenses are covered, loans repaid, and there are sufficient funds in the reserve fund.

What else to consider when planning

Check each month to see if fixed costs have changed. Utility tariffs may increase, the Internet provider sometimes increases the cost of services, mobile communications also become more expensive. Therefore, the amount that you allocated for fixed expenses 3-4 months ago may not be enough.

If you think your internet or phone charges have become too high, you should look for other service providers. And it is better to do it as early as possible - as soon as you notice that the prices do not suit you.

Remember that the first version of the budget is only a draft, and it will have to be revised. It will definitely have weaknesses. Will definitely appear expensesthat you didn't think of. So write down all the new financial information - it will help you more accurately allocate funds next month.

And further. If you do not have enough funds even to cover all fixed and variable expenses, you should think about how to increase income. It's quite real. New offerings can be added to the product line. Plus, to get trained and become a more expensive performer. And be more active in social networks to attract new customers. Look for opportunities - they are sure to be found.