How to Budget on a Fluctuating Income

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It’s the second day of January and my 2019 goals are off to a full start. I like to actually write this out so that I can refer back to this day in a few weeks when the motivation has started to fade!

Motivation is like bathing. You’ve got to do it every single day.
— Zig Ziglar

Last month I talked about the 4 money lessons that I had learned in 2018. In order to make 2019 a success, I needed to address how to remedy my money mistakes from the past year.

The first thing is that I needed to have a budget for 2019. It has become very obvious to me that I am not financially responsible with my money. {Like how I woke up at 2:30 am to shop Sezane’s Archive sale….} My problem is that I have a fluctuating income and I didn’t know where to start. Most of the information that I read said to use the lowest income month from the previous year and make that the base number for your budget. So that’s what I did.

At this point it became very apparent to me, based on my lowest month last year, that I need to work harder in order to meet all of my financial goals for 2019.

The problem that I always get myself into when budgeting is that I want to pretend that I make $30k each month so that all of it can go straight to my debt and I can be debt free in 9 months or less. That’s not the reality of my situation. Being brutally honest with yourself is the first step to creating a successful budget. Cheating on your budget is like cheating on your diet, at the end of the day the scale is going to know you snuck in that bag of skittles.

The reality is that I need to be super honest with myself. I was cheating on my budget.. ok I didn’t have a budget to cheat on, but you know what I mean! Also, let’s gloss over that whole Sezane shopping this morning.

So how did I create my budget?

Disclaimer: I am not a financial expert! This is what I’m doing to budget my personal & business finances. I will probably be tweaking along the way.

  1. Wrote down all of my monthly payments.

    1. Insurance

    2. Loan Payments

    3. Fuel

    4. Food

    5. Business expenses like shipping & inventory

    6. I’ve mentioned before that my husband and I split our expenses (I pay for xyz, he pays for abc.) and that we don’t pay for some things that others do. So my expenses won’t look the same as your expenses.

  2. Calculated my income based on lowest earning month last year. Figured out that I need to not have a month that low ever again!

  3. Determined my money goals. For me this is paying off my business debt.

  4. Made a plan for these goals. (I’ll blog about this soon!)

So I put all of this on a regular piece of notebook paper. I need to actually write out the numbers, I’m one of those people. But you can use an excel spreadsheet or a bullet journal. Honestly, make it as fancy or as basic as you want. But don’t make it any harder than necessary!

Here is an example of what this looks like. (All numbers are random):

Income: $3,000

Expenses: $2625

  • Loans: $1,000

    • Loan A: $200 3.5% APR

    • Loan B: $200 4.5% APR

    • Loan C: $200 7% APR

    • Loan D: $200 5.5% APR

    • Loan E: $200 6% APR

  • Insurance: $250

    • Car Insurance: $50

    • Life Insurance: $15

    • Term Life Insurance: $15

    • Renters/Home Owners Insurance: $25

    • Business Insurance: $70

    • Health Insurance: $75

  • Fuel: $175

    • How many times per week am I fueling up?

  • Food: $200

    • Grocery

    • Eating out

  • Business expenses: $1,000

    • Shipping

    • Supplies

    • Merchant account fees

    • Inventory

Extra: $375

Obviously this is very generic but I won’t you to get super specific.

  • Write out every single loan, then add the interest rate by each loan.

  • Know what each insurance payment is used for. You should be in regular contact with your insurance agent to ensure that you’re getting the most bang for your buck.

  • Determine how much food you’re using vs. wasting every month.

  • Determine how much fuel you’re using unnecessarily. This could be a good area to cut some costs.

The more research and understanding that you put into your budget, the better off you’ll be. Think of your money as your baby, you want to get to know it on a deeper level.

This is also a good time to dig into any emotional spending that you may be doing. But we’ll dive deeper into that topic another time.

What are your tips for budgeting on a fluctuating income? Do you have a budget? Let’s chat about it!

xx, Dani

How to Budget on a Fluctuating Income - Culley Avenue Money
How to Budget on a Fluctuating Income - Culley Avenue Money