Artists often work with inconsistent income. Many of us work a series of part time jobs, do consulting work, or take jobs that rely on tipping for the bulk of our money. Here is how I create the experience of getting paid the same amount at the same time each month for myself, even though I have not had a steady paying, permanent job in nearly five years.
Know how much money you need each month
Make a list of all the bills and expenses you have to pay each month. Then write down the highest amount you have been paying for that expense. If your electric bill fluctuates between $75 and $100, write down $100. If rent is always $800, but groceries are sometimes $200 and sometimes $250, write down $250.
Here is mine:
2020 Budget: $1,500:
Rent/trash/water/maintenance/internet/cable/storage shed package: $790
Electric bill: $125
Student loans: $100
Health Insurance: $20
Callie (my dog’s groomer and monthly health supplement): $40
Total: $1440 (I plan to keep the same budget for a few years, and rent goes up $15 each year)
Begin with a “pay from” account
Start this account with as close to two to six months worth of expenses as you can. If you know your monthly expenses, and you have six months worth, set that amount aside in this account. If you can only manage two, or even one, that’s fine. The important thing is to establish the account and set aside something to serve as your base. Arrange to have all, or at least most, of your income deposited into this account.
My account started with enough money for two months in it. The paychecks from my job teaching writing to adults online are deposited directly into it. Some of the funds from the second day job I took to have some extra money are also deposited into this account. It is only touched once per month, when I use it to give myself a paycheck.
Create a “next month’s bills” account
Many people like to open up an extra savings account for this one. Others just use their checking. Either way, this is the account that holds the money for next month’s expenses. Pay this account from the “pay from” savings at the same time each month. Treat this monthly amount like your steady paycheck.
I pay myself $1,500 per month by depositing that amount from my “pay from” account into this “next month’s expenses” account at the end of every month. Once that account has been paid for the following month, I know I can relax. Next month is taken care of, and I have additional funds waiting for me in my “pay from” account.
Set aside other funds as needed
Most budget gurus suggest setting up an emergency fund with anything leftover after you pay yourself, then meet your monthly expenses. It is always a good idea to keep at least $1,000-$1,500 aside for those unexpected expenses that come up. You might also want to set aside a special fund for your art career, travel, or any other goals you may have.
These funds can be added to with extra income, gifts, fundraisers, or the money left over after you pay your basic expenses from your self-generated paycheck each month.
Johnson, H. (2016).Nine keys to budgeting on a fluctuating income. The simple dollar.
Retrieved from: https://www.thesimpledollar.com/how-to-budget-with-an-irregular-income/
Ramsey, D. (2018). How to budget an irregular income in 3 easy steps.
Retrieved from: https://www.daveramsey.com/blog/how-to-budget-an-irregular-income/