How can you make a budget when you are never sure how money will be coming in? This is the dilemma that many entrepreneurs, artists, and commission only sales people live with. Is it possible to enjoy the stability that salaried or hourly workers enjoy?
If doing the work you love to do is important to you, here are 4 things you can do to steady your flow of income. You may or may not become independently wealthy, but you can live the life you desire.
1. Minimize Fixed Expenses
Make choices and decide what is important to you. Make sacrifices so that you can make a living off your craft. For instance you can:
- Choose to live in a smaller house or apartment
- Drive a used, economical car
- Eat simpler meals at home
- Revise your phone plan
2. Save some of every paycheck—big or small
In addition to living fairly lean, save when the money's good so you can pay the bills when money is not so good. The idea is to save for future basic expenses. How much to tuck away depends on you. A good rule of thumb is to have enough money on hand to cover three or four months of living expenses; more if you can.
3. Plan for taxes
Many who are new to working for themselves fail to save enough to cover income and self-employment taxes. With all that's involved in starting and maintaining a business, taxes are often the last thing on your mind - if they're on your mind at all.
When tax season rolls around, it's easy to be surprised at how much you owe. The last thing you want is to get hit with a huge tax liability without having planned for it. Make a point to keep accurate income and expense records and sit down with a tax expert to make a plan that annticipates your taxes.
4. Get better at budgeting
It takes time to figure out a plan and budget that will work for you. When you're struggling to make ends meet, it's easy to make quick decisions that lead to exorbitant credit card and other forms of debt. The importance of a budget is often a lesson learned the hard way. So get started. Take your lumps and make your mistakes.
If you want to learn more about how to budget onan irregular income, check out the May 2013 issue of Forbes Magazine. They offer a detailed strategy on the subject. If you've never done a budget before, download our Build-A-Budget eBook to help you get started with the basics.