Budget

How to Budget Without Regular Paychecks

Successful budgeting tends to depend on two things: careful planning and a steady income. The first, anyone can do. The second may not be so simple.

If you’re self-employed, you might be asking yourself, “But I don’t have a regular paycheck coming in — can I even set up a budget? Should I bother?”

You can. And, yes, you definitely should.

A budget is simply a way of figuring out how much money you need to go about your daily life, and arranging things so that you don’t exceed that number. Whether you track every penny and every expense, or just keep on eye on a few problem areas, a budget helps you succeed financially.

Budgeting when your income isn’t predictable can be tough. But, actually, it’s especially important if you have an irregular income. Who might have an irregular income? If you fit into one of these categories, I’m talking to you:

  • freelancers,
  • temp workers,
  • consultants,
  • artists,
  • permanent employees with fluctuating hours,
  • commissioned salespeople,
  • those doing seasonal work,
  • people will tip-dependent income,
  • owners of a small or startup business,
  • on-call employees,
  • or simply odd-jobbers.

If any of the above apply, this article is for you. Keeping track of your incoming funds and knowing where your money then goes are incredibly important to maintaining financial security when you don’t get a predictable paycheck from your 9-to-5. Below is one three-step method to creating a budget when your income isn’t predictable.

Step One: Know Your Baseline

When you have a steady paycheck and a predictable income, can make a zero-based budget by allocating spending categories within that predictable limit. But those with unpredictable incomes must work backward — starting with the amount of money you’ll spend, in order to figure out how much you need. If your income is unstable, then it is your expenditures that must be stable, predictable, and repeatable. According to the 50/20/30 rule, there are three categories of expenditures: Essentials, Priorities, and Lifestyle.

Your baseline expenditures are those in the Essentials category — those that must be paid every month, without which you can’t live. Of these, the first costs you’ll want to estimate are:

1. Groceries

For your baseline, include the lowest food cost that is reasonable for your circumstances. Plan your grocery expenditures without any extras, like restaurants, coffee shops (unless you must use them to have business meetings or to avoid paying for internet at home), wine, or fast-food pit stops. If you’ll be couponing and cutting back your food costs, take that into account. However, if you know you won’t actually clip a single square, be realistic about your cost estimates. One of the best ways to get an estimate is to track your spending for a few weeks to get an idea of how much you spend.

2. Housing and utilities

For almost everyone, essential expenses include rent or mortgage. If you’re responsible for either — even if you house-share, live rent-free, or have a sliding rent arrangement — include your minimum monthly housing cost in your baseline. Make sure to include the monthly amount for homeowner’s or renter’s insurance and property tax bills in your total.

If you live in a geographic region in which heating or air conditioning is essential, include these average monthly bills in your baseline. In moderate regions, utility costs are a lifestyle choice. But heat isn’t optional in January in Vermont!

The same goes for internet and phone costs. If you work from home, they’re most likely a necessity and should be included in your housing and utility estimate.

Cut the Cord: Reducing Your Costs for Cable and Cell Phone Services

3. Medical costs

A note about health insurance: The

Household Budgets for Beginners: Simple Tips for Success

Female bicycle commuter

We all know we should make and stick to a household budget if we want to be able to sock away savings each month—and end up financially comfortable. But building a household budget as a beginner can be daunting.

Only one in three Americans takes the time to create a monthly budget, a recent Gallup poll showed. (I don’t need to tell you the rest of us are spending an inordinate amount of time looking at cat memes instead…)

I admit, I was in this group for a long time—and then I moved on to the category of those who create budgets but don’t manage to follow them (What? I spent $200 on organic turmeric drinks last month?!)

But, happily, in the last year, I’ve at last gotten the hang of it—thanks to some pretty simple tactics:

Tracking Spending First

Before making a good budget, I obviously needed to know how much I was spending and on what. To make this easier, I looked for the absolute simplest app, and found it in the Australian government’s free TrackMySPEND, which works on Apple gadgets. On average, Aussies save more than double what Americans do, so I figured their national savings bureau’s apps should be solid.

The app lets you log all your spending, easily categorize it, and, this is key—label each expense as “need” or “want”—making it easy at the end of the month to detect where to cut back. You can also set yourself spending limits. Get your kids on board and have them input all your daily shopping: “Mom, you spent $15 on shampoo?” is enough to make me return the product.

After you’ve been tracking your spending for a month, you should be able to move on to the next step:

Making a Realistic Budget—Including Annual Expenses and Surprises

I used the Australian site’s budget planner—which you can save in an Excel format or online. One important thing it let me do…

5 Budget Overhaul Tricks for the Recently Unemployed

Losing your job is an overwhelming experience. Not only do you have to deal with the emotional and psychological fallout of being let go, but you also have to quickly figure out how to survive financially until you land a new job.

Fortunately, there are some budgeting tricks that even the most budget-averse can use to stretch their dollars after a job loss. Here are five tips that can help you make the most of your finances while you are unemployed. (See also: How to Manage Debt While Unemployed)

Cut spending from easiest to hardest

The trick to an effective budget overhaul is to start your cuts with the expenses you care the least about. Freeing up money that is going to budget items you don’t care about is much easier than having to restructure your life by moving to a cheaper place or selling your car. So it is always smart to start with the easy cuts, and move up the chain to the ones that are harder to cut.

1. Cancel unused subscriptions

Subscription-based companies are a huge part of our economy right now, and many companies make their money through subscription services their customers no longer use. You are probably aware of your subscriptions to services such as Audible or Stitch Fix if you use them often, but if you’re like many consumers, you’re still paying for older subscriptions you’ve forgotten you signed up for.

Taking a couple of hours to comb through your statements to find unused subscription charges and cancel them can free up a surprising amount of money without you having to give up anything you need or use. Even if you are unwilling to do the work of canceling these subscriptions yourself, apps like Trim and Truebill will do the work for you for free.

2. Reduce necessary expenses

Once you’ve taken care of the expenses that you didn’t know you had, you can start working on reducing your necessary expenses — without eliminating them entirely. In particular:

  • Cut your cellphone bill by reducing your data plan. Not only will you probably be using less data while you are job hunting from home, but you may already be paying for more data than you need. Android and iPhone users can download the free My Data Manager app to track their data usage.
  • Call your internet or cable company to downgrade your package. Canceling cable is the standard advice for saving money, and for a good reason — it’s an easy place to trim budget fat. However, even if you don’t have cable, you can often negotiate a lower price with your internet service provider simply by asking. When you call, know the lowest going rate your provider is offering to new subscribers, as well as the rates of the competition. Mention that you are a loyal customer for however many years, and ask for some price consideration. (See also: 3 TV Must-Haves Once You Cut the Cable Cord)
  • Reduce your energy bills by plugging energy leaks, lowering (or raising) your thermostat, and using your appliances…