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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.

Does 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 expenses.

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.

Initially, 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.

Budgets 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.

Ask Mr. G
Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023

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Sent by:

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 Store.

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