ICFE eNEWS #18-12 - May 10th 2018
Budgeting With A Fluctuating Income
By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors
Some people who have fluctuating monthly incomes find it
difficult to know how to set up a monthly budget. Let me give
you some advice on how that is done. It may be a bit more
difficult to figure it out, but with a little planning and
forethought it is certainly within your reach to do.
Let's break it down into three steps:
Step 1. Determine
how much money you must have each month to pay your monthly
living expenses. Count the bigger expenses like house/car
payments, utilities, groceries, insurances, and debt payments,
but also count smaller things like funding savings, clothes,
entertainment, etc. Determining what we are presently spending
is the starting point because we must know where we are before
we can route where we want to be.
Let's say, just for
example, the amount of monthly expenses equals $1200. We must be
able to set aside that amount each month to insure that our
obligations will be met.
Step 2. Decide how many times
you are paid each month and the average amount you are paid each
time. If the amount fluctuates greatly, use a smaller rather
than a larger amount to figure your average income.
this amount cover your monthly expenses? If it does not, you
have two options: (1) decide where you can cut spending or (2)
make more money. If it does cover your expenses, you should be
able to thrive each month.
Sometimes it is helpful to put
your entertainment money in an envelope so you know exactly how
much you can spend without using money that is designated for
another purpose. The same can also be done with "clothing" or
other types of elective spending.
Step 3. Discipline
yourself to see your monies as if they were "slices of pie" that
are set-aside for specific individuals. These designated
"slices" must be reserved for their intended purpose so each
bill can be paid on time. They are not extra, they are already
spoken for. In other words, the $600 in your checking account is
not all "spendable money." Most of it is designated for specific
As you can see, this type of plan works well
because we have divided our monies into designated areas before
we have it in our hands. I call this "bossing your money"
because we tell it where it is going to go before we get it! It
not only guarantees that there will be enough set aside to pay
the car payment, it also encourages us to plan ahead if there
are special expenses coming up on the horizon.
it may seem that a plan like this is restrictive, but in
reality, it is freeing! It allows you to have control over your
money as opposed to never knowing where it goes. I noticed years
ago that "having money" was determined, not by how much money we
make, but how much we manage the money we make.
put us in the driver's seat because we have determined in
advance the route we must take in order to get to the
destination we desire.
© Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023
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Paul S. Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE)
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by
the late Loren Dunton (creator of the Certified Financial Planner (CFP)
designation and founder of the College for Financial Planning in Denver, CO.)
The ICFE is dedicated to helping consumers of all ages to improve their spending
practices, increase savings and use credit more wisely.
The ICFE is an
award winning, nonprofit, consumer education organization that has helped
millions of people through its financial continuing education courses programs
and resources. In addition to eight Certification courses covering identity
theft, credit files, credit repair and credit scoring, among others, it also
publishes the Do-It-Yourself Credit File correction Guide, which is updated
annually. The ICFE has distributed over one million Credit/Debit Card Warning
Labels and Credit/Debit Card Sleeves world wide.
The ICFE is a partner
with the national Jump$tart Coalition for Financial Literacy and the California
Jump$tart chapter. The ICFE staff is also active with San Diego Saves and
Military Saves, both offshoots of America Saves.
The ICFE is also an
on-line help for consumers who spend too much. ICFE's spending help was featured
in PARADE Magazine in the Intelligence Report section. The money helps and tips
are from the ICFE's Money Instruction Book, our course in personal finance.
The ICFE helps consumers and students with mending spending, learning about
the proper use of credit, budget and expense guidelines, how to set up and
implement a spending-plan and also how to access financial education courses and
how to teach children about money. Other ICFE services include: Ask Mr. G
library, a free eNews service, and an online resource center for students,
parents and educators, plus financial education learning tools in the ICFE Book