If you have a variable income, it can be tricky to set up a budget. You may have difficulty knowing what you can afford each month. If you work solely on commission it can be even more difficult to plan a budget. Here are some basic tips to get you started.
1) If you receive a base salary plus commission, construct your budget entirely on your base salary. This should cover your basic necessities (mortgage/rent, utilities, and food), and then from there you can prioritize your other obligations.
2) If you have a paycheck that varies from week to week according to the hours you work, then you should base your budget on the lowest paycheck amount and go from there. This will give you breathing room if you do have a tough month with low hours.
3) After you have determined what you need to cover the basics you should prioritize the other expenses that you have. This includes your car payment, car insurance, medical expenses, and other debts. You should also put a certain amount into savings each month to cover yourself if you have month where you do not make enough to cover your living expenses.
4) It is important to remember that your fun money should come at the end of the list of your priorities. You need to meet your obligations first. This can be difficult to do, but it is important.
5) One way that you can help yourself to succeed on a variable income budget is to follow the suggestions above, and then slowly save up enough to cover an entire month’s budget. Once you do this you can simply transfer that money into your account at the beginning of the month. Then you will put your paychecks into your savings account, ready to transfer at the beginning of the next month. This way you will know how much you need to cut back when you are having a lean month.
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