Building a Budget on a Fluctuating Income

One of the hardest parts of living on a fluctuating income is creating a budget. When you can’t predict exactly how much you’ll make each month, it seems impossible to accurately plan and save. It is possible, however, to live comfortably within your means and save money at the same time.

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First, look at your past bank statements to get a good picture of how much you’re spending each month. Add up all non-negotiable monthly expenses – things like utilities, groceries, housing and transportation. Then add what you’re spending on extras, such as entertainment and eating out (aka “fun money.” The sum is how much you need to live comfortably each month.

The next time you’re paid, deposit that exact amount into your checking and put the rest in savings. If your paycheck is smaller, you’ll need to find places to cut back, starting with fun money.

By basing your income on last month’s spending, you’re setting a reasonable budget for yourself – not one based on wishful thinking. You’re also paying yourself a dependable “salary.” Any extra money isn’t mindlessly spent but deposited into savings, where it will be able to accumulate.

This method is called a zero-sum budget, since theoretically, your checking account will be at zero at the end of each month. The first few months of this method may be rocky, as you work out the kinks.

Look for areas where you’re spending more than you’d like and reallocate the money as needed. You’ll eventually settle into a plan that works.

Real Solutions
At Countybank, we provide checking and savings accounts for every budget and goal. Find out how our financial solutions can take you farther. Call us at 864-335-2440.

Note: “Fresh Ideas” are published each week by Countybank and its family of financial service companies. With financial centers in Greenville and Greenwood, Countybank has a team of highly engaged professionals ready to bring a full scope of financial solutions designed to help families and business owners reach their goals.