Inconsistent Income Budgeting!

Inconsistent income is a fancy-dancy term for folks who don’t have a full-time steady gig but work on short contracts, freelance or take casual shifts. In many blogs and articles about budgeting, income is usually assumed to be steady. In 2022, that’s not the case.

The rise of the freelancer and the side-gig or side hustle is growing faster than the subscription fee for your favourite streaming service. People worldwide realise that they have more freedom, and more income, from getting out the nine-to-five office experience and working from home doing everything from copywriting to being a virtual assistant. The pros of this type of work are evident, but one significant con is that income can vary month to month.

So, it is the purpose of this blog to focus on those who have inconsistent income and how they can organise their financial life to ensure they are on the path to less debt more money. We see you.

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Budget Must Take Priority!

One of the obvious cons of having an inconsistent income is that you can’t factor in an exact amount that you will earn in the financial year. However, there will be bills that are the extreme opposite of inconsistent. Ensuring that they take priority and are covered by the income coming in is key to ensuring that you stay debt-free. Working out how much you will need to make at a minimum each week to cover these expenses will help the drive behind picking gigs to cover these costs.

Worst Case Scenario

Being an optimist is fantastic quality, but when looking at your budget, it might be “safer” to turn that optimistic look around and assume that you will have a tough financial month. This way, you can give yourself the confidence that even if the gigs don’t come in this month, you’ll be ok because the ebb-and-flow of inconsistent income means that some months might be tight, but others could be lucrative to make up the difference plus some.

Put away some emergency funds.

We have written about emergency funds before, you can read the blog here, and basically, they are your “break glass in an emergency” funds. Putting away as much money as you can into an account that you won’t touch is key to filling the gaps of a dry-gig time. Even if you can only put a few dollars a week into this fund, future-you will thank you for it.

man sitting on the floor of his house with a laptop and work papers around him.

Tracking inconsistent income is a must!

As we stated before, it’s easy to budget for your income when you have a full-time job. It’s a set amount. However, you’ll need to constantly put how much you are making into your budget with inconsistent income. You could use a previous year or previous quarter of income as an average, but as gigs fluctuate, you’ll need exacts to ensure you are covering your debts and also saving.

Speaking of debts…

Paying off debt while having inconsistent income can be tricky but still very doable. There will be some differences, though, as when you have a steady income and come into a little extra money, it’s typically advised to put that extra into paying the debts. It may be the more sustainable option with inconsistent income to pay off a set amount. Even if you come into extra income, but that income into your savings or emergency fund in case you have a dry month and need those extra dollars later to ensure your debt is paid consistently.

Of course, this blog is written with a vague paintbrush to give general advice to as many people as possible. We understand that everyone’s situation is different, so the best advice we can give is to talk with a financial expert about your specifics so that you can put the best foot forward on your pathway to less debt more life.

If you would like to talk to one of our experts about cutting years and thousands of dollars off your mortgage, you can set up a risk-free virtual meeting here.

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