When you know what kind of income to expect each month, it is easier to plan your budget around your expenses. But what happens when you have an irregular income? Each month is different so it can be quite challenging to budget your money effectively. While being careful about your money can help in this case, the rules of budgeting will change a little when it comes to irregular income. This often happens in the case of people that work on their own in Phoenix.
If you are your boss, you may find it quite difficult if not even useless to create a budget. Still, if you haven’t been there yet, you may experience trouble with your money if you don’t plan right. If you want to make sure that all your expenses are covered, and you can also save some money, there are ways to efficiently plan your personal finance even if we are talking about an irregular income.
Do Your Best to Know Your Essentials
What are those expenses that must be covered each month? They are the ones you cannot live without, like utilities, groceries, and so on. Well, you should know them very well because most certainly they consume half or even more of your monthly budget. So, how much do you spend on groceries monthly? You could start by writing down everything you buy that is related to food, coffee, and everything you need in your household. Be honest and don’t cut corners because you need to have a realistic image about these expenses. If you’re using coupons or cut down costs by purchasing items on sale, have that in mind as well, so that the numbers you get are the real ones.
Also, do you have to pay rent or mortgage? Do you have to make payments on any title loans in AZ? How about your utility bills, how much are they? Make sure to write down your electricity, heating, Internet, phone bills, but also home insurance and tax bills as well, because you must pay them monthly as well and they cannot be avoided.
Don’t forget about health insurance and transportation, if the case. Health costs are one of the reasons people’s budget explode because medical services can get your expenses through the roof. So, it would be a smart move to opt for a form of medical insurance. And you should not forget about the paycheck you’re going to offer yourself each month as well because you will need money for personal expenses.
Set a Target of How Much You’ll Have to Earn per Month
Once all the previously mentioned expenses are summed up, you’ll know just how much money you will have to give away per month on things that must be paid no matter what. To this, you add your paycheck, and you should have an overall image of how much you should set as target per month, to be sure that all your essentials are covered, and you still earn the desired paycheck. The number will get the minimum you should receive. If you receive less, you’ll still have to cover your necessary expenses, which means that your paycheck may be smaller in some cases. If you earn more, the money you’ll make above this limit should go into a savings account for financial priorities first, then in an emergency fund, and lastly in a bonus fund for your lifestyle choices.
Having Separate Bank Accounts Will Help You Track Your Money Easier
There’s no limit on how many bank accounts should one person own, so open as many as you’d like at the bank you prefer, if you’ll have a minimum balance on each of these accounts. You’ll need a business account, where you’ll have all the checks and invoice payments deposited, which come from your clients. You transfer money from your business account to the other accounts for better management, keeping money in this account only if you should make payments and investments on the behalf of your business.
You’ll need a personal account where your monthly paycheck, necessary expenses, and lifestyle choices will be found. Thus, you’ll have to pay for these from this account, but without exceeding your monthly paycheck. It is also the account where you can grant yourself periodic bonuses in case you’ve exceeded your target and managed to earn extra money after you contributed to your savings accounts.
You’ll Need an Account for Emergency Savings
Each month, you should put some money aside after covering the essential expenses and your paycheck. How much you decide to put in this account it depends on you, but you should do it because you never know when bad times will arrive. Getting registration loans in Phoenix, AZ offer short term assistance, but if you have money gathered in this account you can use it for these particular situations. When you lose your job; when you have a medical emergency, and you need extra funds. You might need to repair your car because that’s your only form of getting around and you can’t-do without it. Use it for emergency expenses at home, like a leaking roof, a flooded basement, and so on; when you have a personal emergency, like traveling to attend the funeral of a family member.
Don’t Forget about Priority Savings as Well
This is an account where you should send money for those payments that must be made once or twice a year, like paying for your home insurance, property taxes, and other types of taxes. You can also use this account to save money for important things, like saving to make a down payment for a new house, or to pay for your student loan, college savings for your children, money for a new car, and so on. If you keep the things that are most important in sight and don’t spend your money on things that are not necessary until you covered the essentials, it won’t be such a difficult task to manage a budget, even if it comes from an irregular income. You just need to set your priorities straight and maintain your budget accordingly, and you’ll minimize the existence of unwanted financial situations.