Irregular income is a constant theme with contractors, freelancers and day labourers. Their income streams are varied and almost never from the same source. The time frame for these income sources to reach their accounts will also depend on their propensity to find work. It’s an erratic lifestyle that makes saving one of the harder considerations. Here are a few simple tips that might help you save money as someone depending on irregular income patterns.
Saving Money With an Irregular Income
Scheduling to Perfection
Erratic income cycles do not mean your payments can follow the same pattern. Strategies need to be devised, that will help you meet your payments in time. This is the true challenge of living on an irregular income. Scheduling payments and saving money becomes a critical part of leading a normal life with an irregular income. What this also means is that a part of your income will be constantly inaccessible for future payments and this will cause your spending power to dramatically decrease. In essence, irregular income induces responsible living and a propensity to save money whenever possible.
Setting Savings Goals
You have to set savings goals and make commitments with your own money. With an irregular income, following a prewritten set of goals with a strong conviction is key. While the income patterns may vary, it would serve you well to save money in a progressive manner that compliments the lifestyle you would like to have in the future. This is why a zero-based budgeting template needs to be followed. This simply means that you personally avoid buying something until the need for that particular commodity becomes unavoidable. Irregular income and zero budgeting go hand in hand. Combining these two together is a very good way of creating a tangible savings profile.
Create An Emergency Fund
This holds true for most people but has a deeper sense of urgency when it comes to individuals who tend to survive on irregular income streams. An emergency fund is an important financial asset that can float you through a crisis situation. For regular people who do not have an emergency fund, the second best option is to wait for salary day. This is not a luxury that is afforded to people who survive on irregular income. Hence, it is very important for them to create and save into an emergency fund at the earliest possible time frame of their employment years. A well nourished and cared for emergency fund is a necessity when your lifestyle is attached firmly to your irregular income.
Separate Bank Account
Creating a separate bank account or your irregular income might be a good idea. Not only will this be an effective way to pay taxes but at the same time it can help you keep track of your money. A strict differentiation between your incoming salary and potential savings will be much better done with two different accounts that keep track of your money flow. Savings will become easier when you have a hands on perspective on how much money you have access to and then putting it in context to the goals you have set for yourself.
People with irregular income often struggle to put their lives in order because of the inconsistency in the money flow. This can be corrected through careful planning and conscious saving habits. Cultivating an awareness about how to go about this with gusto, will help anyone looking to save money in the long term.