How To Budget With A Varying Paycheck

Trying to manage your personal finances with a steady and regular income is hard enough but when you never know what your paycheck will be, it can seem almost impossible. Rest assured, it’s not. It just requires a bit more organization and forsight.

The first step you need to take is gather all of your pay stubs for as far back as you can. It would be best if you can get a year’s worth. Next, calculate the total amount you were paid for the entire year. Then divide this number by 12. This will give you your average monthly income. For future reference, start making a log of how much you get paid so that you have the amounts when you need to calculate something.

Now that you have figured out your average monthly income you will need to develop your budget. Here though, is where it can get a little complicated. Because your paycheck varies, you aren’t always going make the amount you have budgeted. The only way to mitigate this is to save when you make more than what you have budgeted.

For example: You have determined that your monthly budget is $1500 per month; In February you earn $2000. You will need to put away $500 of that money so that you can make up for any month that your income falls below $2000.

This could be difficult at first if you haven’t been used to saving up to this point. You have to be dedicated and disciplined and make sure that you start putting that money away so you have it when you need it. The real upside is that if you are able to put the extra money away and you have several months that you make more than your budget, you could end up with a sizable savings account.

Remember, one of the biggest mistakes in budgeting is that people underestimate their expenses. Make sure you are accurate in your caluclations so that your budget doesn’t fail. By making a budget and averaging your income, you avoid feast or famine spending. Instead, you are able to spread your income over the entire year and cover every expense appropriately.

Give this plan a try. It should help relieve some stress that comes with paying the bills at the end of the month.

If you get a varying paycheck, what have you found works with keeping balance and all basis covered?

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