This series of post has been focused on how to manage your budget when it is powered by irregular income. It is my goal to help you eliminate the feast/famine lifestyle (especially the famine part!!). Before we focus on today’s step, let’s review the previous steps.
STEP ONE Recognize it!
To avoid living the feast/famine lifestyle, you need to recognize that you are earning irregular income.
STEP TWO Determine monthly expenses
It is important to understand how much income is necessary each month to ensure that the household operates smoothly and free from the feast/famine lifestyle.
STEP THREE Save up at least three months worth of expenses
This is your buffer that absorbs the wild patterns of your customers! It allows you to live life smoothly without the feast/famine episodes!
STEP FOUR Become personally debt-free and operate your business debt-free
What are the advantages of operating a business debt-free?
- Monthly expense load drops! there are no interest payments to make!
- Your business can absorb dips in revenue much more effectively. Again, there are no interest payments to absorb!
- Breathing room. It is amazing how much stress a pile of debt brings on.
- When you spend your own real money, you will manage it better. I don’t know why it is, but if I am spending someone else’s money (i.e. the banks) I am much more susceptible to make a riskier decision! When I am spending my money, I am much more likely to do thorough due diligence before doing a deal!
Interested in learning more about irregular, seasonal and cyclical income? Check out my newly revised book, I Was Broke. Now I’m Not. Just click HERE!