Today’s article for you is about handling the ups and downs with your finances.





Specifically, we’re going to talk about how to budget if you have VARIABLE income. Maybe you’re a freelancer or an entrepreneur or an independent contractor. The question is: how do you plan your finances if your income is inconsistent? Read on…



A simple fact that is hard to learn is that the
time to save money is when you have some.
– Joe Moore


As an employee with a regular, steady paycheck, things are (for the most part) stable. You know exactly how much will be hitting your bank account every week, two weeks or month. You can plan for the future. You can save.


But what happens when you work for yourself, or you’re a freelancer? Or entrepreneur? How do you handle the ups and downs of your income?


Well here are three tips to consider to stay on top of your money when your income fluctuates.


Know your minimums. As a freelancer or entrepreneur, you’ve got to get clear on the minimum you must bring in to cover all your basic personal and business needs per month. In other words: what is the lowest amount you must make in order to have money to pay your bills, cover your business expenses , pay taxes, insuranceand also give yourself a “Fun Money” allowance?


When you know this number, life gets easier. Write it on an index card and keep it where you can see it.



Set aside plenty of reserves. Once you know your minimum number, then you can start to think about setting aside money in savings. (These are your reserves.) That way, if you go below your minimum, you can take out ONLY what you need from the reserves in order to make up the difference.



If you go OVER, give yourself a little personal bonus for your hard work and put the rest of it in the reserves. Resist the urge to spend more on months that you make more. The best time to save money is when you have some!



(Power tip: If you haven’t struck out on your own just yet, plan to save 12 months of living expenses or more before you strike out on your own. Being self-employed is a bumpy ride. If you’re freaking out about money all the time, you can’t do your best work! Savings will help you tremendously.)



Remember taxes. I’ve seen people strike out on their own and made decent money only to be hit with a massive tax bill in April because they forgot about taxes entirely. Or they didn’t set aside enough. Make sure you build a relationship with your accountant BEFORE your file your taxes so you’re not blind sighted later. Ask a lot of questions now so that April is a breeze.



Remember, when you know how much you need, you can use that as the baseline for all of your future decisions. If you go over? Great, you’re ahead of the game. Put the money in reserves. If you’re behind, quickly get into action to make sure you hit your monthly minimum so that you don’t have to go into debt to cover the difference. Lastly, having savings can help you feel more secure during leaner months.