If you are self-employed, a business owner, investor or freelancer, we all need a budget. I know you may think well my income is irregular how can I create a budget. The truth is you need a flexible budget more than anyone.
Firstly use the past 12 months to determine your spending pattern. Does your income vary because of seasonal work? Does it vary depending on whether clients can be bothered to pay up on time? Once you have established the reason why, then we can begin to create a flexible budget to deal with those circumstances.
Identify all your expenses whether its food, utilities, a shoe fetish, or a regular Friday night pub appearance at the local.
Now prioritise the necessities, we all know that we need food, shelter and warmth. So prioritise your mortgage or rent, utilities and groceries. Ensure you can pay for these every month.
On lower income months maybe you will have to cut your going out or take away budget and cook more at home. If you budget based on the lower income and allocate funds accordingly, having the extra income means you can still afford your needs and maybe some of your wants as well.
If you know that you have a period annually where business is low e.g. seasonal businesses or products, plan and set aside money each month leading up to that date. That way you have a buffer when you come to the low months and you can ensure you can pay for all the necessities.
If not stock up the pantry and then you know on the lower income months you can always put food on the table and you can use that income to pay the necessities such as utilities and rent.
The number one golden rule to remember, if you reduce the temptation to splash out and overspend on the good months, then you can set aside the surplus cash for months that are tougher. Why struggle to make ends meet on some months and live like a king on the other. Having the surplus cash and a buffer that you can use will help reduce stress and tension between relationships on the harder months.
Personal finances are up to the individual, ensuring the budget has flexibility and factoring in the luxuries that make you happy are not a bad thing, you just have to prioritise when you know income is varied.