Question

I am wondering about variable income to the extreme, I work as a hairdresser getting Commission and tips only. I live in a small tourist town and so my monthly income varies ALOT! For example, in the last five years, my yearly income has varied to the tune of $15, 000 which is huge. And when I make my lowest amounts ( per paycheck) I actually am in the negative and get behind in bills. But my yearly income divided by 12 months even in my lowest earning years does cover my bills. So I feel like I need savings just for this purpose and I cannot figure out how to do this. Should this be something other than my emergency fund? And how can I make a budget when my lowest possible paycheck is not a livable wage? ( also factoring in daily cash tips) . I have been stuck on this for a while. THANKS!  

Answer 1

Maybe you need a supplemental job.  

Comments

@sunburn i am working my max available hours

Answer 2

I agree I would think you need an emergency savings fund. Wondering if you could pick up another job at another salon (two jobs) or maybe teach at a local hairdresser school. Just trying to think of ways to get added funds. Wishing you the best!  

Answer 3

We’re in the same boat. What we did was set up an account that has 3 months of expenses in it to cover us if we have a bad month or if we have to find a new job. Car business is very volatile. We take the money from months that are really good and pay much more than our monthly expenses.  

Answer 4

You need a savings account that you can “pay yourself” from on the months when you make a deficient. We created a budget and extra goes into savings. For us, it’s really important to have enough savings to cover the slow months or we will just create more debt.  

Answer 5

Best way to tackle this is to figure out your max out of pocket per month for the year. Take the highest amount and that is your goal for income each month. Any month that you don't spend up to that amount or you earn more then that amount you put it into a savings account separate from everything else. The goal for the savings account should be atleast highest month X3. Separate from the 3-6 month saved. As this savings account would be used only when you don't bring home the amount needed too.  

Answer 6

Take your lowest salaried year and divide by 12. Each month only allow yourself that amount of money. Put any overage into another account. On the months your short, take only the money your short from that account. You may need to dip into emergency funds depending on the time of year you start. At the end of the year if you have any extra in the second account leave enough for 1 months pay and put the rest into savings. Rinse and repeat