Financial Resilience 101: Navigating Variable Income Like a Boss

So, you've got a rollercoaster of an income, huh? Welcome to the club! I get it, the ups, the downs, leave you on cloud 9 some months and feeling like you are drowning others. It can add a lot of stress when trying to manage your money! But fear not, it is possible to budget with a variable income, whether is is variable month to month, or season to season.

1. Embrace the Chaos: Trying to fit your finances into a neat little box every month might just drive you crazy. Budgeting like an employee with a fixed salary won’t work for you and if you’ve tried it, you probably didn’t stick to it for too long.

2. Build a Buffer: The first level of budgeting with a variable income starts with building buffer. This fund isn't just for rainy days; it's for stormy weeks or even months. Save up enough to cover your essential expenses, so when your income takes a nosedive, you've got a financial cushion to break your fall.

3. Know Your Baseline: Identify your non-negotiables. What are the essential bills and expenses that must be covered each month? Knowing your baseline helps you prioritize where your money needs to go first, even during the lean times. When times are lean, it’s important to focus on the essentials!

4. Get Budget-Savvy: When dealing with a variable income it’s important to have systems set up that help you stay on track. Forget those rigid budgets that make you feel like a failure if you overspend on lattes. Instead, create a flexible budget that adapts to your income fluctuations. Break it down into categories – necessities, nice-to-haves, and savings – so you can allocate funds accordingly.

5. Average it Out: Take a deep dive into your past income history. Calculate the average monthly income over the last year or so. This can give you a more stable figure to work with, smoothing out the peaks and valleys. It's like finding the financial middle ground. If you are self-employed be sure to build saving for taxes into your plan.

6. Stash Some Surplus: In those glorious months when your income is higher, resist the urge to splurge on unnecessary stuff. Instead, stash that surplus away in a safe place (ideally a high interest savings account). Then you have money their for the lower-income months to help keep you afloat.

7. Keep it Real: Life happens. Sometimes you'll overshoot the budget, and that's okay. Cut yourself some slack. The key is not perfection but resilience. Learn from those overruns, adjust your budget if needed, and keep moving forward.

8. Celebrate Wins: Variable income can be a wild ride, but don't forget to celebrate your victories. Did you manage to save more than usual this month? Treat yourself (within reason, of course). Recognize your progress, and remember to review your budget regularly to add and adjust things as needed.

So, there you have it – a survival guide for navigating the unpredictable seas of variable income. Remember, you're not alone in this, and with a bit of strategy and a dash of financial wisdom, you can turn that variable income into a financial powerhouse. If you are ready for some support to build and implement a plan for your money, I’d love to connect on a free consultation Zoom call!