These days having a permanent job with a regular salary seems to be a luxury. Many jobs have changed to casual with no guarantee that you’re going to work every day, which means, when you don’t work, you don’t receive any money.
Not only many permanent jobs have been converted into casual jobs, but they also disappear, thanks to Covid. And people, who are now unemployed, will have to put up with casual jobs, freelancing jobs, or own assets that generate income to survive. The income is no longer regular, making it hard to budget.
Here are 5 tips for budgeting for those with irregular income.
1. Determine the Essentials
Determine the absolute necessities and make sure your job can cover these necessities. These are the things you can’t live without, such as food, water, gas/electricity, housing, transportation, and to many of us: the internet. The internet is not only for entertainment, but also to look for jobs or business opportunities.
To get estimates of these expenses, track your expenses for the next 3 months, or if you’ve always tracked your expenses, you can even study your expenses for the past 12 months and see what you can reduce or substitute to cheaper (but still healthy) alternatives.
2. Determine the Non-Essentials
Non-essentials are things we can live without, but nice to have. They can be takeaway coffees, eating out, Netflix, etc. Try to limit or even remove these non-essentials temporarily, until you find a way to earn more.
Bear in mind that an irregular income is a fluctuating income. One month you may earn double and the next month your income doesn’t even cover the bare minimum essentials. This means, every time you receive more money, you must use the extra money to move you forward to be in a financially healthier position, like being debt-free, having sufficient emergency funds, and finally having income-producing assets.
3. Clear Out All Debts
Ideally, you shouldn’t borrow any money. But things happen. Student loans happen. And now you have to pay your debts. So make this a priority. The longer you take time to pay your debts, the more money you’re wasting on interest payment.
4. Build an Emergency Fund
If possible, build an emergency fund that covers 6-month expenses of your essentials (housing, food, transportation, etc).
5. Have Income Producing Assets
This is the most crucial point in financial independence. Income-producing assets can be shares, real estates, businesses, cryptocurrency, royalty, and high-interest savings. Once you have enough income-producing assets, you’d finally let money work for you instead of the other way around.
Relevant Articles
While it’s easy to say “pay off debts”, “save more money”, and “have self-discipline”, in practice, they all can be challenging.
Here are some articles that may help you to stay focus on the path to financial independence where you have income-producing assets so you don’t have to worry about casual or disappearing jobs anymore:
How To Stay Dedicated to No Spend Commitment – 6 Tips
How to Avoid Overspending: 5 Tips
5 Common Things to Replace to Save More Money
20 No-Spend Ideas for Outdoor Entertainment – When You Are Alone
20 No-Spend Ideas for Indoor Entertainment at Home – When You Are Alone
