How To Budget With An Irregular Income
October 24, 2023
If you are trying to sit down and build out your budget for the month but are stuck on how much money you have to budget, then you are setting yourself up for failure. I won't go so far as to say you are budgeting wrong because I don't believe there is a right and wrong way to budget, and you should use whatever method works best for you. That being said, I do strongly believe that there are better ways than others to budget. In fact, it is one of the reasons we created Ploutos Budget. If you are someone who has tried many times in the past to budget but can't seem to make it work or stick to your budget, then you should try a better way. If you are new to Ploutos Budget and looking for more specifics on how to get up and running with your first budget, check out: Getting Started.
We Don’t Budget Future Money
Why don’t we budget future money? At Ploutos Budget, we only budget the money we currently have, not future money. Why do we do that? Simply put, that money isn’t ours yet, so we can’t spend it. A budget is a spending plan for our money. We are telling our money what its job is. The big problem with other budgeting apps and methodologies is that they have you start the month, input your expected monthly income for that month, and start allocating those dollars. We don't find that very helpful, as the budget is no longer accurate, and as a result, it can’t be trusted. By only budgeting the money we actually have in our spending accounts, we don’t have to play a mental gymnastics game with our budget, wondering if our checking account actually has the $200 for groceries that our budget says we have.
Our goal is to help others get control of their finances, plan for their future expenses, and stop living paycheck to paycheck. We believe that starting your month off based on a guesstimate of your earnings and planning those non-existent dollars towards spending categories is a fruitless endeavor. It is not helping you plan for the future, as you never really know on each day of the month how much money you actually have to spend. You may have budgeted $450 for gas, but maybe part of that money you don’t get until the 20th of the month. Your budget should give you the whole picture and give you the confidence to spend your money knowing it actually exists. If you are looking for more information about the benefits of budgeting this way, check out: A Better Way To Budget.
Sinking Funds
Combining this with sinking funds is how we can break the paycheck-to-paycheck cycle. Sinking funds are a great way to level out your inconsistent spending and income across all the months. By building up our sinking funds, we are protected from the planned and unplanned expenses that will inevitably come. While it is impossible to predict all the expenses that may arise in our lives, budgeting with sinking funds can help us cover our unexpected expenses. Just the process of budgeting all of your spending money every month will give you amazing insights into what you are spending and how much money you need each month. Everyone thinks they have a good idea of what they are spending each month, but most people are just spending their money based on their checking account balance. If you are unsure what sinking funds are or how they make budgeting easier, check out: What Are Sinking Funds And How Do They Make Budgeting Easier.
If you are new to budgeting or have tried it in the past but struggled with it, then we hope Ploutos Budget can help you budget better. Budgeting isn't always easy, but it is always worth it. Stick with it and don't give up. Budgeting gets easier the longer you do it.
Happy budgeting.
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