Budgeting

“I Just Don’t Have Enough Time” (and other poor excuses for not having a budget)

“I just don’t have enough time.”

I can’t tell you how many times I’ve heard a person tell me this when discussing the importance of preparing a written budget each and every month.

But it’s not true. It’s a lie we tell ourselves. You see, if we can come up with an excuse, then it stands to reason that it is okay to avoid doing what we know we should be doing to maximize our money – a budget!

Here is a list of items of which at least one is true for nearly every single person who has told me, “I just don’t have enough time to prepare a budget.

  1. They have enough time to watch their favorite TV show each week
  2. They spent at least 45 minutes sitting on the sideline of their child’s sporting event (before and after the actual event)
  3. Facebook consumption exceeded 4 hours each week (probably looking at funny Cat and dog videos)
  4. They stressed out over money for at least 30 minutes each day (checking bank account balance each day and worrying about an expense clearing the bank too early)

Here is a fact: You DO have 1,440 minutes each day.

Here is a good question: What do you need to eliminate from your life so that you can prepare and follow a budget?

To help you get started, we’ve created a helpful set of budgeting tools as well as an instructional video for you HERE.

Other poor excuses for not having a budget:

  1. “I hate dealing with money.”
  2. “Money stresses me out.”
  3. “There’s just not enough money.”
  4. “I just need to make more money.”
  5. “I have no idea how much money I’m going to make this month because my pay is so crazy.”

4 Budgeting Steps for Irregular Income – Step 4

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?

  1. Monthly expense load drops! there are no interest payments to make!
  2. Your business can absorb dips in revenue much more effectively. Again, there are no interest payments to absorb!
  3. Breathing room. It is amazing how much stress a pile of debt brings on.
  4. 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!

4 Budgeting Steps for Irregular Income – Step 3

In this series of posts, we are learning how to manage your income when it is irregular or seasonal. Over the last few posts, we have learned the first two steps to prosper with irregular income and put away the feast/famine lifestyle forever!

STEP ONE  Recognize it!
You must recognize that you are living with irregular income!

STEP TWO  Determine monthly expenses
It is important to understand how much income is necessary each month to ensure that your household operates smoothly.

STEP THREE  Save up at least three months worth of expenses
WHAT?!!!!  I am sure that is what many of you are saying right now!  Yes, I did say that you need to save up at least three months of expenses.  Remember in Step Two that you calculated your monthly expenses?  Multiply that number by three, and you have your savings target.  I call this savings the “Known Slumps Fund”!  You know that slumps are coming, so be prepared!!!  This is HUGE in eliminating that horrible feast/famine lifestyle!

WHY?!!!  You might be asking this question.  Why on earth should I save up at least three months worth of expenses? I am glad you asked that question!

Irregular Income Image 2

Let’s say that you have monthly expenses of $3,000. This means that you need to have at least $9,000 in your Known Slumps Fund.

KUE Income-Outgo Only

Let’s look at a year’s worth of expenses. Now, it is easily seen that this person has earned enough to make it this year. They have taken $36,500 for the year. BUT look at how irregular the income is! Have you seen something like that before in your business? This causes life to be CRAZY. In January, you are eating ramen noodles like they are going out of style. February through April are decent, but then it dies down again May through July. Famine of the worst degree! All of the sudden, August through October are awesome! Feasts abound! Then November and December come in with back to back terrible incomes. Back to the ramen noodles!

What should you do? Get a Known Slumps Fund that equals three times your monthly expenses!

Let’s see what difference that makes!

KUE Balance

When you look at this chart you realize the POWER of having three months expenses in the bank! Whether you have a $500 month or a $6,500 month, you live on $3,000 that month. That means that you get to EAT!! That means that you can save money (remember the monthly expenses includes savings!). That means that you can have some fun each month!

The Known Slumps Fund absorbs the irregularities of your income! Fill out your Known Slumps Fund – it will take so much stress out of your life!!

Get a copy of any of our FREE tools located HERE

4 Budgeting Steps for Irregular Income – Step 2

Are you currently living with irregular or seasonal income? Interested in learning how to prosper while earning irregular income? It is my goal in this series to help you stop living the feast/famine lifestyle that is so often associated with irregular income. As we focus on today’s step, lets review the previous step.

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
One of the key steps to budgeting is knowing how much income is necessary each month to keep your household running smoothly. That is why it is so important to determine your monthly expenses.

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

  1. Fixed Expenses – Enter all of your fixed expenses – house payment, utilities, car payments, credit card payments, cell phone, childcare, etc.  This also includes SAVINGS!
  2. Variable Expenses – Enter the average of all of your variable expenses – gasoline, groceries, 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, upcoming non-monthly 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.  Then I divide that number by twelve to determine how much I need to save per month. Lastly and most importantly, I set up that amount to be auto-drafted into my Online Savings Account, Capital One 360. (If you’re looking for an Online Savings Account, just click HERE).

==Known, Upcoming, Non-Monthly Expenses Example==

KUE Example

So in this example, I would include a line item of $483 in my monthly budget for Known, Upcoming Non-monthly Expenses.  This would allow me to bring a stop to the feast, famine lifestyle!! You now have a monthly budget that will change very little throughout the year and Step Two is complete!

Stay tune for Step Three where we’ll tackle the toughest part of irregular income – having enough cash on hand when you need it.

4 Budgeting Steps for Irregular Income – Step 1

Irregular Income Image 1

I know that there’s a large group of people whose family economy is powered by irregular, seasonal or cyclical income. As I’ve continued to travel and meet people this recurring question comes up – “How do I budget when my income is irregular, unpredictable or seasonal?” In this blog post I want to address this exact question.

Real estate agents, hair stylists, commissioned salesmen, and business owners all experience cyclical income.

Several times, I’ve heard from people it is impossible to budget when you have this type of income. They say budgeting is impossible because they have no idea how much they will make each month. I say it is not only possible, but people with irregular income need a budget more than anyone!!!

For this very reason, I’ve broken budgeting with irregular income down into 4 steps. And here’s a hint – It’s EZ!!!

STEP ONE  Recognize it!
You must recognize that you have irregular income!  If you have ever starved to death during the “off” season, you KNOW what I am talking about!  In order to stop having your life severely impacted by “off” seasons, you must prepare!

If your family economy is powered by irregular income, what do you currently do to prepare for the “off” seasons?

In Step Two, we’ll go over actually PREPARING a budget with cyclical income!