Not everyone has a steady income source. Freelances, daily wage earners, seasonal workers and contract workers may live on irregular incomes. Unexpected expenses do not discriminate on the basis of earnings. Anybody can be caught unaware of such expenses at any time, so it is vital to have an actionable plan to manage your expenses.

Financial experts recommend budgeting to stay on top of your expenses. It is all but impossible to get true insight into your expenses without creating a budget.

Define your essential monthly expenses

The monthly income for two different months cannot be the same. It will be hard for you to meet your expenses when your income is too low in that month. You should calculate your essential expenses so you know how much money you exactly need to meet them. These expenses include:

Insurance premiumUtilitiesTaxesFuelchildcareLoan paymentsPhone billsGroceries

Grab your bank statement for the previous six months so you know the average spending. Make sure every month your budget has enough money to pay for all these expenses. Now, the question is how you will be able to do that when your income is irregular.

The trick is simple – you will have to live off the income of the previous month.Spend money only on essentials. If you have earned a lot of money in a particular month, set aside the rest mount. It will help tide you over in months of little or no income.

 

Estimate your lowest monthly income

There could be months when you are at a loose end. Of course, you will need money to meet your regular expenses, such as groceries and payments on short-term loans. Base your budget on the lowest possible monthly income so you do not run out of money. If that amount is not sufficient to cover all your expenses, you should cut back on them. For instance, you can reduce your housing costs by renting a room.

Track your spending

Having an idea of your essential expenses is not enough to be on top of your expenses. You should monitor them because chances are some of the expenses slip through. There is no need to panic. You just keep tracking them. It will help you create a better budget next time.

You can record your expenses in a manual spreadsheet. This is the simplest and perhaps the most effective way as you note down each expense, including the tiniest one. You will have better clarity about your expenses. Build a habit of noting down all expenses.

Write it down as soon as you spend money on something. At the end of each week, you can club your expenses under different categories to know which one eats up most of your budget.

Budgeting apps are a good alternative to manual spreadsheets because you do not have to go through the hassle of recording all transactions. A budgeting app will fetch all transaction details you make through your debit and credit card.

For that all you need to do is to link it to your bank account. Of course, such apps cannot record any cash transactions, so you will need to record them manually. Make sure you choose a trusted app.

Build a nest egg

Living with an irregular income source leads to stress and anxiety, especially if you cannot stash away for a rainy day. Money lenders Dublin can help you when you fund your emergency, but loans can be expensive.

You should build an emergency corpus to meet unforeseen expenses. When you are out of work, apply for unemployment benefits from the government. You can also seek other benefits like jobseeker allowances.

Having an emergency cushion will help you gain peace of mind. Make sure that you dip into this money only to meet unforeseen expenses. Chances are it falls short of cash. In that case, you can apply for a loan from a lender.

However, it is recommended researching the most affordable interest rates. Loans are expensive and then can be even more expensive when your income is irregular. The risk of falling into debt is quite high.

You may not be able to contribute to your safety net consistently. A good way to stow money for a rainy day is to transfer the money you are left with after meeting essential expenses to your savings account. Because of your fluctuating income, your contribution will vary by month.

The bottom line

It can seem to be a hassle to budget when your income is irregular, but with consistent efforts you will find yourself in control of your expenses. You should identify your essential expenses and try to live off the previous month’s income. Make sure you pay yourself first and then spend on other expenses.

 

Description: Find out your essential expenses, track them and create an emergency cushion to create a budget when your income is irregular.

 

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