Any tips for managing money with a variable income?

gettingthereslowly..

Ok, so I've been lurking on this forum for a while now, and have picked up some great tips, it's also fantastic to know that there are so many of us in the same boat, as it can sometimes feel like you're the only one struggling away! I'm only 6 months away from the date I am desperate to be debt free by but I'm losing momentum..

I'm self employed and earn a good wage per day but only work part time (single mum to a 4yr old) but my income can change drastically month to month (for example last month I earned £600 but next month I'll earn £3500) Is anyone in a similar position and if so how do you manage your finances?!
It's always the low income months where I'm really keen on budgeting etc (to the point I become a real miser!) but then I get a good month and it all seems to go out of the window!

All my debt is 0% so it's manageable but such a huge chunk of money goes on repayments each month, if i could get them cleared I'd effectively have a £6000 pay rise which is just crazy seeing as I have NOTHING to show for my debt.

Any tips greatly appreciated!

ellesbellesxxx

Hi there,
Looking at your sig - wow - looks like you are already doing really well
Have you completed a SOA? That is always a good starting place - if you want to post it too people will give you tips on what else you could be doing - otherwise, it will show you how much you NEED a month set by for your basic bills/debt repayment.
You Need A Budget is highly recommended by many for allocating your money too.


I find it helpful to have different accounts - our joint account we both transfer to for all our joint bills.
I have my main account for a couple of my own direct debits then a couple of current accounts for savings (5% interest) then an ISA.
That helps me allocate money to certain pots!

ellesbellesxxx

What I meant to say is that an soa would show you how much you need to put aside for each month, then for months where you have extra coming in, then you know you need to put 1/2 months extra worth in that account too if that makes sense?

WantToBeSE

I am a self employed single mum too, and my income is also variable.

There are a few things that i do to make sure i still keep on budget, the main one being i look at it long term. So i see what i have earned over the past 6 months (or 3 months) and divide that by 6 (or 3) to get an average monthly figure.
Then, i only budget according that that figure.

For example, if i have earned £1k for 3 months, and £500 for 3 months, that averages out at £750 a month. Regardless of if its a month where i earn £1k or a month where i earn £500, i budget with £750.

That means that on the months where i only earn £500, i have the surplus from the months where i earned £1k but only budgeted for £750.

I hope that makes sense?

gettingthereslowly..

Thank you! I used the savings I had to clear a chunk of the debt so not as impressive as it first appears! (also i've decided to ignore student loan for now!!)
How do I do a SOA?! I've been using free app expense manager to monitor my budget but I really need to be more honest with myself as i've been quite selective with what I'm adding to my outgoings, I think i'm in denial as to how much money I actually waste.. Will start a fresh tomorrow.. No today!

gettingthereslowly..

WantToBeSE wrote: »

I am a self employed single mum too, and my income is also variable.

There are a few things that i do to make sure i still keep on budget, the main one being i look at it long term. So i see what i have earned over the past 6 months (or 3 months) and divide that by 6 (or 3) to get an average monthly figure.
Then, i only budget according that that figure.

For example, if i have earned £1k for 3 months, and £500 for 3 months, that averages out at £750 a month. Regardless of if its a month where i earn £1k or a month where i earn £500, i budget with £750.

That means that on the months where i only earn £500, i have the surplus from the months where i earned £1k but only budgeted for £750.

I hope that makes sense?

That's a great idea, do you have a separate account to move the money that's surplus? I always seem to have some big bill come up, hence trying to build up an emergency fund so I can dip into that instead..

WantToBeSE

This post gives the link for the SOA. Try and fill it out as much and as honestly as possible: http://forums.moneysavingexpert.com/showpost.php?p=49607953&postcount=2

It may take some time, and be a bit of a faff to get all the paperwork together to fill it in, but it will be worth it as you'll have a clear and concise picture of where you stand financially, and other people can give helpful comments on where you could cut back and/or make savings.

Good luck