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Budgeting on a variable income?(9 Posts)
DH is self employed and his income varies, as does when he gets paid. There is no payday to work from and no way to predict how much money we will have each month.
My income is fixed (student nurse on bursary, plus some benefits) but some payments are weekly, some 4 weekly and some monthly. I'm good at maths and budgeting in general (am forever making income/outgoings lists) but struggle to balance it all due to the variations.
How do others organise their finances in this situation?
Is he just starting out that it's so unpredictable? I'd budget for a modest lifestyle and save any excess money. Once you've built a pot, you can decide to up your spending.
Same as JoJo. I'd live as frugally as I can for a few months (or however long it takes ( 'self employed' can mean on the breadline right thru to millionaires) so there was a 'buffer zone' there each month.
Now I have been SE for a few years and income can still be up and down. I have an account that my income goes in to and on the last day of the month I transfer myself a wage in to our joint account. It works for us.
If I earn more then it sits there until a tighter month and if I earn less then hopefully I’ve alreay built up a buffer.
At the same time I also transfer 10% (I’ve worlee out that’s what I need) of that months income in to my ISA ready for tax and ni to be paid.
My husband has been self employed since we met but as I am a sahm we now only have his income to rely on and its really hard. The best solution is to build up some savings so you can always use these to cover bills coming when money isn't due in - all good as long as you can replace it each time a pay check comes in. We often operate on the back foot and are scrabbling around for money at the wrong times but we just bumble through each month somehow! That's with 2 kids and 2 dogs - not easy at all! X
Yes, as Snap says, get all your income paid into one account and then transfer a fixed sum once a month to another account to cover bills, food and travel - DDs to come out of that account.
Depending on your income and outgoings might have to live frugally until you build up a buffer, but once you do, hopefully you effectively get back to having a regular 'payday'.
If you build up a surplus in the account your income goes into, this can be used for annual and irregular expenses like insurances, Christmas and house/car/pet repairs and even treats/holidays/spending money.
DH has been Delft employed for years, but last year moved from regular gardening jobs to repair/servicing machinery as his main focus. He's part-time in order to cover the childcare as my degree is full time and involves long days. So income is only about 5k a year at the moment. Payment is half cash, half cheques/online payments and comes in drips and drabs so very difficult to manage. Have looked into a business account to try to make it more manageable but they all seem to have charges.
When I was working, we were able to save a bit but can't at the moment. He's had recent issues with missing a lot of his regular jobs due to depression so income has become less predictable.
Last time I did a budget, I worked out that my fixed income covers our fixed expenses and then his income should pay for food and diesel, but recently this hasn't been working out. Definitely need to cut back somewhere!
The business us building up though, he's getting regular customers coming back so is able to predict some future work and hopefully this will only get better.
It's hard work though and stressful for me as I manage all the finances...
Thanks for all the advice.
I think the most sensible thing to do would be to get a separate bank account and encourage customers to pay online/cheque , otherwise DH just spends the cash and he never seems to give cash the same value as money in the bank! Also need to redo the budget and sit down with him and explain how much he needs to earn. Without putting too much pressure on him! It's hard as I don't want to make his depression worse but also we can't survive without him earning! Perhaps if I give him more financial responsibility then he'll feel more effective? He's got a credit card now to use for business expenses so we can keep these separate, hopefully this will help him understand the relationship between money he is paid and how much the business costs to run!
He isn’t a child that you can ‘give responsibility’ to. He’s a grown man with a family so he’s got the responsibility anyway.
To be honest, if he’s only able to earn 5k from his business per year, then that sounds very part time. Majority of people in that position continue to earn an income elsewhere until their business is successful enough to live off.
I know it’s difficult with you studying full time and childcare to factor in but I’d focus really hard on trying to generate more income so you can support yourselves more easily.
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