Imagine the picture. Andrey is a touring musician and writer. He rarely accurately determines how much he will earn next month. The musician’s life is interesting, but unstable. A musician comes and plays, receiving a percentage of sales at the bar or concert tickets. He is not paid salaries.
To make sure that Andrey has enough money to cover expenses, Andrey works with the budget. He runs a music group as a business organization. With changes in salaries and how bad and good months alternate, Andrey keeps track of how much he spends on essentials and avoids excessive spending on excesses.
When there is a lot of cash, he puts the amount that is needed per month into the current account. He sends the remaining funds for savings. Having a reserve that can be used when things go wrong is a key to persistence..
Not everyone plays in a musical group, like Andrei. But this does not prevent them from finding themselves in a similar financial situation. Many professionals – from waitresses to stock brokers and from sellers to freelancers – work in conditions where payment is unstable.
Budgeting is well formed when it is always clear how much money comes and goes, and inconsistency in income makes it difficult to manage funds properly. But people who receive different salaries every month should not despair. A few strategies you can use will make your budget streamlined..
1. Find out your monthly expenses
Know the basic expenses. The essence and feature of personal spending. Get information about what you pay every month. So, there will be a target income, the minimum amount that is exactly needed during the calendar period.
Use digital budgeting tool, a spreadsheet or other system that works for your lifestyle and helps you track expenses for several months. Pay attention to what costs are fixed, non-discretionary expenses: rent, food, travel, and what costs will be discretionary: restaurants, travel, sick leave, etc..
The goal is to have enough money to cover the basic expenses for life every month, even during professional downtime. Keep your finger on the pulse so your budget becomes manageable.
2. Create a salary for yourself
To avoid overspending, try one proven method. Send large earnings, bonuses and other rewards to a savings account. Set up automatic monthly payments of the required amount from this savings account to the current one. So you organize a predictable stream of income with an unpredictable financial lifestyle. This method creates the so-called salary. The structure for the unstructured always makes tangible changes in the situation.
3. Build financial depreciation
In order for automatic payments to be received regularly and salaries not to be delayed, one needs to have strong financial depreciation for times when work is slow. Save up the amount for basic expenses for the whole year. Otherwise, you just squander your own savings.
In addition to savings depreciation, create a tough time fund that should only be used in emergency situations.
Some might find it frightening to have such a large reserve of money, but this strategy is just what will allow you to live normally with an unconventional income structure. Build your airbag when you have a lot of money and spend it as slowly as possible when you are aground.
If you find that you are emptying the reserve too quickly, review the discretionary costs and consider how you can reduce them..
4. Do not neglect long-term goals.
Your salary is unpredictable, but this does not mean that you need to neglect long-term financial goals, such as retirement savings. Consider retirement contributions, buying an apartment, and other major purchases as a necessary part of the financial plan. Always set aside a percentage (rather than a fixed amount) of each salary for long-term savings. If there will be a month when you earn 50,000 rubles, make a smaller contribution than a month when you receive 150,000 rubles.
5. Reward yourself
You need to tightly plan the budget in conditions of unstable salaries. But this does not mean that you cannot reward yourself for success in work. After you replenish your savings, take care of long-term goals and cover the necessary expenses for your life, use part of the income to finance your desires in an adequate range. When there is a financially good month, treat yourself. Everyone needs positive reinforcement and motivation to work even more successfully..
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