2616: 7 Tips For Living on an Inconsistent Income by Marc with Mad Money Monster on Budgeting Strategies & Emergency Fund
Feb 9, 2024
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Marc, a finance expert, shares tips for managing finances on an inconsistent income including calculating average monthly income, budgeting for below-average months, saving during good times, and embracing the positives of fluctuating income.
Calculate average monthly income and base your budget on below-average months.
Maintain a consistent standard of living to reduce financial stress and maintain stability.
Deep dives
Calculating your average monthly income
To manage an inconsistent income, start by calculating your average monthly income over the past 12 months, dividing the total by 12. Although your income may not reach this level every month, it serves as a starting point for budgeting and financial planning.
Budget based on a below-average month
Create a budget based on an income that is below your average, taking into account your worst months from the past year. By keeping your total budget close to the income from your lowest-earning months, you can ensure your expenses are manageable and avoid dipping into savings or going into debt.
Establish a normal level of living
Maintain a consistent standard of living regardless of income fluctuations. Avoid spending extravagantly during high-income months and resist the temptation to make drastic budget cuts during low-income months. By establishing a normal level of living, you can reduce financial stress and maintain stability despite income variability.
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Episode 2616:
Marc of MadMoneyMonster.com shares tips for managing finances with an inconsistent income, including calculating average monthly income, basing budget on below-average months, establishing a normal living standard, saving during good times, keeping liquid savings, having a fallback plan, and embracing the positives of fluctuating income.