Tips For Managing An Inconsistent Income Tips For Managing An Inconsistent Income Shares You know, there’s not a lot that I miss about working a standard full-time job. But, if there’s one thing that I miss the absolute most, it’s a steady, regular, and predictable paycheck. Now that I make my living as a freelancer, my income is slightly less predictable. Some months it’s a smooth, relaxing ride. Other months, it sends me flying down a steep hill or around a sharp curve, and my stomach jumps up into my throat. There are plenty of months where I’m actually making more than when I worked full-time, but it’s difficult to predict. Learning to live with the constant income swings can be a challenge, but there are ways to navigate through it. 1 Get a Rough Look at Your Finances — Including Your Bottom Line First things first, you need to get a rough idea of what your take-home income is — no matter how inconsistent. Sit down and write all of your current projects and the average income you make. Again, I know this can vary greatly, but do your best to get a rough idea. Next, do the same thing with all of your expenses to figure out exactly how much you need to earn each month in order to make ends meet. This activity isn’t meant to discourage you. It’s actually helpful. If you have no idea what your bottom line is, you’re essentially playing a guessing game with your finances. For example, let’s say that I need to earn approximately $2,000 each month in order to pay my bills. Now, let’s imagine that I actually end up taking home $3,200 in the month of August. I know I’m ahead of where I want to be. “Money is only a tool. It will take you wherever you wish. But, it will not replace you as the driver.” – Ayn Rand But, I also know that September will be a light month due to some client setbacks and a vacation, and I anticipate only taking home $1,500. So, I won’t go on a major spending spree, and will instead save that extra $1,200 to help fill in the gaps next month. 2 Set Financial Goals Alright, having an inconsistent income is really scary. And, it can be so terrifying that it almost causes you to coast along without ever setting any sort of financial goals. Instead, you just let your money pile up in your business checking account, because you have no idea where else to even put it. Just because your income fluctuates doesn’t mean that you can’t set goals for yourself. Don’t pressure yourself into thinking these goals need to be overly lofty. For example, I’m making an effort to put $200 of my income into savings every month. It’s not huge — but it helps me feel like my money is going somewhere other than my living expenses. Plus, I’m building up a nice cushion if I ever go through a rough patch. 3 Have a Backup Plan Depending on your industry, this may not always be an option for you. But, I like to have a project that I can fall back on if I ever need to fill in some income holes. For example, I work with a large organization to help people write their resumes and improve their competitive standing in the job market. As someone who loves writing on career topics, this job as a “career counselor” of sorts is fun for me. But, admittedly, it’s not something that I do too often. In fact, I’ve been so busy with other larger projects, that I haven’t written a resume in months. But, this outlet is a great fallback option for me. The company has no requirement for how many projects I need to complete to stay active in their system. So, if my regular client work ever slows down, I can simply log back in and start accepting orders and payments again. 4 Prioritize Spending I’ll just say it — I’ve never been great at budgeting. Luckily, I have Mr. Math (aka my husband) to help me through. But, one thing I have learned to do is prioritize my spending. Write down all of your monthly expenses on a list — both the things that you need to spend money on (car payment, student loans, insurance, gas, rent, etc.), and the things that you want to spend money on (clothes, haircuts, dinners out, etc.). Then, rank these expenses. At the top of the list, put the things that absolutely need to be financed. From there, continue towards the bottom of the paper with the more frivolous things. This way, you’ll know exactly where your money should be going when you get it, and you’ll save yourself from not being able to pay the water bill because you just had to have that new purse. 5 Open a Separate Business Account I’ve talked about this many, many times. So, I’ll just touch on it briefly here. But, you absolutely want to set up a separate business account for all of your business income and expenses. Not only does this save you major headaches come tax time, it also helps you keep a close eye on all of your business finances. 6 Save, Save, And Then Save Some More Despite being tempted to splurge on something after a pay day, it is important to remember that there will undoubtedly be rainy days in the future. It’s important to build a bit of a safety net to fall back on in case you find yourself in a tough predicament. Enough to cover four to six months of your living expenses should suffice. Kat Boogaard Kat (Short for Katarina) is the voice behind the popular and inspiring blog Lemonade Linings. She is a freelance writer by day and a dog snuggler by night (and also most of the day). She gets to wake up everyday and work on things that she loves, and she's all about helping you feel that very same way about your life and career.