Irregular/Seasonal/Cyclical Income Budgeting – Part 2

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 == 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 would allow me to bring a stop to the feast, famine lifestyle!!!  Want to read more about planning for known, upcoming non-monthly expenses?  Click HERE.

You now have a monthly budget that will change very little through the year and have successfully completed Step 2Determine 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.

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1 Comment

  1. beverly stadler on July 13, 2012 at 12:14 am

    WHAT IS AN HSA topic?

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