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.
- 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!
- Variable Expenses Enter the average of all of your variable expenses – clothing, spending money, entertainment, dining out, etc.
- 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.
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.