Probably one of the most difficult challenges one can face is not having a stable income. You might earn a thousand dollars in one month, and in the next, your income could drop to a hundred bucks! This often happens with freelancers or people working on contractual roles. They can’t build accurate long-term plans because they’re often not in control of the amount of money they’ll get at the end of each month.
But regardless of how tough it may seem, creating a budget is a necessity for every family, irrespective of the presence of a stable income source. Financial planning is the only way to survive in this world, and this isn’t just talk in the air. These are realistic experiences. If you look around, you’ll see it clearly, and even if you look at your own life with a little focus, you’ll know that planning always pays off.
But talking about budgeting and actually doing it are two different things. And if you don’t have much experience with it, we’re here to help you out with these simple tips.
Accurately record your income every month
At the end of each month, record how much you earned, and in the following month, do it again. But while doing so, also count how much you spent during the same month. Subtract your monthly expense from your monthly earning to arrive at your net monthly income. Do this for about six months and then calculate your average income (add up the six-month net amount and divide it by 6). Now consider that as your salary and draft your budget according to that.
Create an emergency fund
Perhaps this is the most essential advice today. An emergency fund is for people with fluctuating income what a safety rope is for those who walk the wire! You must take sharp drops in income or even the possibility of earning no money into account, and then try to have an amount to save you in such conditions.
Set your goals
Remember that money, no matter how important it is, is only a means to an end. Considering money as a goal in itself will negatively impact your physical and psychological condition. You must clearly know what you want to do when you have the money. Would you want to pay off some debts? Or would you want to buy a new car or house? Whatever your goal may be, you must define it and know whether it’s possible to achieve it in the short or long term.
Wrapping It Up
Financial planning in the current era isn’t something that can be debated about. It just has to be there for everyone. We see thousands of debts, financial crises, and desperate people every day, and of course, you don’t want to be one of them.