Living With Uneven Income

Today's workforce is very different than it was 20 years ago. Back then, it was common for someone to expect to work for the same company for 20 or 30 years for pay with steady increases, retire at age 65, and collect a pension. Now-a-days, millennials are changing jobs three or four times before their thirties and numerous workers have yet to begin saving for retirement.

Budgeting Tips for Seasonal, Temporary, and Commission Workers

Some of us do not earn a steady paycheck, even though we are gainfully employed. Temporary workers, seasonal workers, and workers paid on commission all have to contend with uneven incomes. The most important thing a worker in this situation should do is to learn how to live within his or her means. Learning to spend less than you make will serve you well. This starts with a solid budget. To put your budget together, print out some budget worksheets for yourself. Construct a budget using your average income. On the bottom of the budget worksheet, you will see a list of spending categories and percentages. These percentages represent the portion of your income it is recommended you spend on each category. Do not worry if your percentages do not match. This is normal! Over time, you will get closer to these percentages as you adjust your budget and spending habits.

• The first step in putting your budget together is determining your average monthly income. Use your pay stubs, or estimate as well as you can if you haven't saved them. It's important to consider all forms of income so that you have the best representation of your current situation. Living with uneven income makes this the most difficult aspect of budgeting, but try to estimate your income the best you can. This may mean creating different variations of your budget.
• Next, account for all of your monthly expenses. Gather up and record all of your monthly bills. Then consider monthly expenses like gasoline, groceries, and other necessary costs. It is very important that you also keep a journal of all your spending for at least three months. This serves two purposes. The first is to determine how much you actually spend each month. The second is to show where wasteful spending can be eliminated. Are you getting coffee on your way to work? Do you go out for drinks after work? The purpose of this is to see where your money goes, down to the penny. Getting a handle on your expenses is crucial. You MUST be aware of how much you spend each month to see where you can start saving.
• SAVE, SAVE, SAVE! Saving money is important for everyone, but it is absolutely vital for workers with unsteady incomes. A general rule of thumb is to save between four and six months of expenses. Six months' worth of savings is obviously better, but set your sights on four months first. If your employer does not deduct taxes from your paycheck, be certain that you also save enough for your tax bill. Make sure that you are trying to save a minimum of 10% of each paycheck; save more if you can afford to. If you cannot afford to save 10% of your check, save as much as you can. List saving as your most important expense in your journal, and pay yourself first! Unexpected expenses, layoffs, or lack of sales are all things that can affect you if you aren't a salaried worker. Being prepared is ideal. Keeping enough money in the bank to overcome those unexpected expenses and holiday seasons will help you make it through tough times.

Initial Budget vs. Adjusted Budget

The more uneven you income is, the more flexible your budget must become. This is another opportunity to see where wasteful spending can be eliminated. During a good month, a $90.00 cable bill might not seem so bad, but how well does it fit into your lowest earning month? Is call waiting absolutely necessary? Would it be better to bring your lunch to work three times a week instead of eating out most days? Could you make coffee at home and bring that to work instead? Go over your expenses again and see if you can find places to save now so you can make a bad month less difficult to handle down the road. Simple habits like clipping coupons, saving spare change in a jar, and carpooling are all money savers that will not only help you grow your savings, they will reduce the amount of money that you are accustomed to spending. Make an adjusted budget based on your new savings. When you compare it to your initial budget, you will see that you have more free cash available for saving and for unexpected expenses. Continually adjusting your budget and spending will protect you if you have a bad month or two, or help you to save for vacations and holidays. You will not have to make drastic changes to your lifestyle to get by. Start small and the savings will surely build with your commitment to budgeting, regardless of your uneven income.

Budgeting with an uneven income is not quite as simple as budgeting with a steady income, but it is not extremely difficult, either. It requires that you pay close attention to your spending and prepare for slow times. Account for every income, and every expense. This sounds easy enough, but oftentimes when we're going over our client's budgets there are several items that are easily overlooked.