Irregular/Seasonal/Cyclical Income Budgeting – Part 02

This is part two of a series focused on how to prosper while earning irregular income.  It is my goal to help you stop living the feast/famine lifestyle that is so often associated with irregular income.

As we focus on today's step, it is helpful to review the previous step.

Step 1 – Recognize it!  To avoid living the feast/famine lifestyle, you need to recognize that you are earning irregular income.

The next step is to determine how much money is necessary to make the household operate efficiently for each month.

Step 2 – Determine monthly expenses

To determine your monthly expenses, you should pull up a monthly budgeting form and do the following.

  1. Fixed Expenses  Enter all of your fixed expenses – house payment, utilities, gasoline, car payments, credit card payments, groceries, cell phone, childcare, etc.  This also includes SAVING for retirement!
  2. Variable Expenses  Enter the average of all of your variable expenses – clothing, spending money, entertainment, dining out, etc.
  3. Known, Upcoming Non-monthly Expenses  This is a KEY STEP!!!  If you do not add in all of those known, non-monthly upcoming expenses, you will continue to live the feast/famine lifestyle (more likely the famine lifestyle!!!!).  These type of expenses are BUDGET-BUSTERS.  Here is what I do.  I list all of the known, upcoming non-monthly expenses and place their annual cost next to them.  I then divide that number by twelve to determine how much I need to save per month.
Example of Known, Upcoming Non-monthly Expenses
So in this example, I would include a line item of $483 in my monthly budget for Known, Upcoming Non-monthly Expenses.  This allows me to bring a stop to the feast, famine lifestyle!!!  Want to read more about planning for known, upcoming non-monthly expenses?  Click HERE.
    4.  You now have a monthly budget that will change very little through the year!
 
You have successfully completed Step 2 – Determine monthly expenses!
 
Now, of course, the trick is to have enough cash on hand every month to make this monthly budget work!  Ahhhhh, that my friend, will be discussed tomorrow!
 
Question of the Day:  What have been the biggest budget-busting expenses you have experienced?
 
Looking for additional Personal Finance Resources?  You can obtain free tools by clicking HERE and purchase books/materials by clicking HERE.

4 Responses to “Irregular/Seasonal/Cyclical Income Budgeting – Part 02”

  1. Mark Asbell August 28, 2007 at 6:05 am #

    Christmas Gifts
    Vacation
    Car repairs
    Medical expenses
    Car License Fees
    Annual Trash fee
    Annual subscriptions to other stuff like AAA and work related stuff.

    Most of these are small but if they aren’t planned for and come unexpected they can bust the monthly budget and you have to make it up somewhere else in the budget – which can be stressful on everyone in the family. So I don’t think much about which one is the biggest because they all can bust the budget equally. The only time I think about which ones are biggest is when I’m planning the monthly amounts I need to save for each category.

  2. Julie Brown August 28, 2007 at 2:24 pm #

    Birthday gifts (and money to send them if needed)
    School expenses
    School clothes
    Prescriptions (not having enough for them)

    These were things that we forgot about when we started budgeting. John calls it “Getting to know your Budget”.

  3. P. Blountt September 20, 2007 at 9:36 pm #

    Great infomation. Im a Child Care owner. my income changes from month to month sometimes I cant pay myself. The info is very helpful.

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