Do you have an irregular income?
If so, a savings account is your new best friend. It can be exhausting living to the fullest for a few weeks or months and then agonize while waiting for more money to come in. The cure is to have money available for those low earning times. Then you can relax and go on as normal. With irregular income, you start with your expenses and work in timeframes, say monthly.
- Determine what bills and expenses you must pay and put them on a calendar by the due date. The total amount is what you have to earn each month.
- Look back at your lowest earning month last year. Would it cover Step 1? If not, how much are you off? That difference is your 1st savings goal. After you save that amount, your 2nd savings goal is the amount of Step 1. Now, you’re covered if you have a bad month.
- From here, decide on a salary or allowance you would like.
- Anything you earn over that each month, throw it in your savings account. You want to be able to cover 3-6 months. You’ll then have cash reserves. By the way, banks, lenders, and investors love to see reserves. Put this money aside say in a High Yield Savings Account or CD.
- From here, make some plans. There’s unexpected and yearly expenses, taxes, paying off debt, investing, retirement, vacation, gifts, holidays, education, etc.
For regular money tips, follow me on Instagram @lwilliamfinance