Help! Organizing ( not spending ) a fluctuating wage

Maximillion

There must be loads of people out there - self employed or commission based earners that manage to budget on a fluctuating wage?

It's not that I can't calculate things, I've got spreadsheets coming out of my ears.

What I'm looking for is a system to move money to different accounts so I can go to one surplus account and the money in it is ok to spend. I want to only have to check the income and bills accounts occasionally.

If I have access to the buffer it always seems to get inadvertently spent. A system of different accounts would help enforce some discipline which I'm lacking on a daily basis.

for example if my monthly bills/savings are 2800 a month and I might get paid between 1500 and 4500. So the bills account needs to have a buffer to cover the short months.

The figures are fairly irrelevant I'm just wondering if anyone has come up with a working system for a similar situation?.

Extant

Although I am no longer on an incentive/bonus/commission structure, surely you must have a base salary? Budget within that and then deal with the excess you receive each month.

If your salary could go as low as £1,500 a month, it could go that low any month, or any series of months - thus making a monthly expenditure of £2,800 obviously stupid.

Budget for what you KNOW you will get and then deal with the rest after.

Maximillion

BarclaysManager wrote: »

Although I am no longer on an incentive/bonus/commission structure, surely you must have a base salary? Budget within that and then deal with the excess you receive each month.

If your salary could go as low as £1,500 a month, it could go that low any month, or any series of months - thus making a monthly expenditure of £2,800 obviously stupid.

Budget for what you KNOW you will get and then deal with the rest after.

Thanks, that would be stupid - but I'm not on commission - I get a salary and a day rate - I know the minimum number of days I'll work in a year and my annual income exceeds the monthly expenditure. It's the irregularity that catches me out. Yes I can be objective, calculate averages, maintain a buffer etc. But I'd rather a system that swept my income to different accounts taking the fluctuations into account and not forcing me to monitor it.

I merely wondered if any one had a method for this or something similar.

[Deleted User]

Have your income paid into account 1.

Set up a standing order from account 1 to account 2 for a fixed amount each month - enough to live on including all incidentals etc.

Anything left in account 1 is a 'float' to cover future low months. Obviously you need to start this system in a month when you earn more than the minimum you need.

Watch the balance of account 1
- to make sure it doesn't go overdrawn / exceed any overdraft limit
- make sure it doesn't get too high, in which case shift some of the balance to a higher interest account, but leave enough for future low months.

The tolerances will depend on the variability of your income eg if you only ever have 2 low months (1,500) then a good month, say due to a quarterly bonus, and outgo is 2,800, your maximum balance in account 1 might be 2,600 ((2,800-1,500)*2 months).

CLAPTON

variable income is the price of self employment or commission based income so you either get another job or adapt to your situation.


spend only the minimum of your monthly income and save the rest for a year
then, after ayear or so, you will have built up a little savings which will allow you then to start spending the average monthly income

it's a simple fact that variable income means you MUST save and build up a bufffer... there is no other way (expect get a steady job)

Valli

I would run two current accounts - in effect one you pay variable amounts into and one you transfer an equal amount into from that account- the one for your regular (budgetted) spending. Have all monies paid into the income account - transfer budget needed over to spending account then a third account for surplus savings when you have a very good month.

Maximillion

Thanks all,
Currently I use a first direct account with a sweep facility to a savings account - the sweep happens when the current account crosses 3 thousand. the savings account is used to top up the current account if my income that month doesn't bring it up to the 3. I have a weekly standing order "personal wage" to a second current account and another to my wife.

It works in theory but it would be better if the savings account would sweep automatically the other way too.

It should work but it too easy too access. We are forever "dipping" for one reason or another - I was hoping there might be a current account out there which allowed you sweep from one current account to another.

CLAPTON

sadly technolgoly will not help you

you need to SAVE .. you don't really need a complicated technology for that.. it means you spend less and save more until you have a substantial cash buffer

or get a regular job.

sorry; that's just how it is.

Maximillion

Ho hum, thanks anyway