Having a budget is the foundation of managing your money. Making budget is easy when you have a dependable income that’s the same every month. But what do you do when your income varies from one month to the next? This is the case for many contractors and freelancers. Your expenses remain the same, but your income doesn’t. You still need a budget and you can make one. You have to go about it differently.

Total your expenses

When you’re making a variable-income budget, start by totalling your income as you would if your income was fixed. Add up the things you spend money on every month. This includes rent/mortgage, utilities, car note, car insurance, health insurance, life insurance, phone bill, loan payments, credit card payments, and taxes. You should even calculate how much you’ll spend on variable expenses like gas and food.

Average your income

If you had a variable income last year, too, use your last tax return to come up with an average monthly income. Just divide your gross income by 12 to come up with an average monthly income. If you don’t have a year’s worth of income, average the months you have. For example, if you’ve been freelancing or contracting for 7 months, add up the last 7 months of income and divide it by 7. This will give you an average income to base your budget on.

Does your average monthly income exceed your expenses?

Your average monthly income needs to meet or exceed your expenses. If not, you’re going to run into a cash flow problem. Adjust your expenses to fall below your average monthly income. Some examples of places you can cut back are: gas, food, utilities (save on electricity), and entertainment. For more ways to cut your expenses, go through each category and decide whether it’s a need or a want. Wants can be cut out.

Your budget in practice

You’ll need to have at least three accounts – one checking account and two savings accounts.

The checking account will hold your monthly income that you use to cover bills and other expenses.

One savings account will hold your income then be used to “pay” yourself at the end of the month.

The other savings account will be for savings. You will only deposit money into this account. You will never withdraw money from it unless it’s to invest it in a higher interest rate account.

Start your budget at the beginning of the month. Your checking account needs to have enough in it to cover your expenses for the month.

As you get paid throughout the month, put the money into Savings Account #1. You shouldn’t have to touch your savings account during the month. If you do, then you didn’t budget enough for your expenses or you’re overspending (or you ended up getting paid less than average, see below). At the end of the month, around the 28th, transfer $2500 (or what you need to cover your expenses) into your checking account.

Less than average months vs. higher than average months

When your income varies, some months will be less than average and some will be higher than average. Once you’ve been using this variable-income budgeting method for a few months, you won’t notice the ups and downs of your budget as much. The surplus months will build up your savings account to help offset the “famine” months.

However, if you experience a “famine” month in the first 1-2 months of using this variable-income budgeting method, you might have trouble meeting all your financial obligations. In this case, you have a few options. Cut back on some of your expenses (the best option). Pull from your emergency fund (which ideally has 6-12 months of living expenses). Pull from your savings (only when options 1 & 2 don’t work).

Don’t let a famine month discourage you. Like I said earlier, once you have a couple of months where your income is at or above your average income, your savings will build up and the bumps will smooth out. Give it six months and you’ll be happy you did.

The internet has become indispensable in today’s generation.  Gone are the days when the internet was used mainly for research. Today, you can shop through the internet, you’ll find sites that offer business solutions – the internet is now one big yellow pages! You will also find more and more people who are working from home just by using the internet – online writing, network marketing, even customer service and call center. What is it in an online business that people are drawn into?

When being just a down line in a network marketing or freelancing as a writer doesn’t get you the money that you need, it could be high time to rethink your options and start your own online business instead. A lot of people are drawn to starting their own business online because of the many benefits they stand to get.

For one, an online business doesn’t require a big capital.

You don’t need an office to maintain, you cut on your fuel consumption, and you don’t incur a lot of overhead expenses as you can work on your own, right in the comforts of your home. The savings in turn will result in cheaper end products, and having inexpensive products will attract more customers, so you earn more!

You’ll be working from home so you get to be with your family everyday – no more leaving for work – so you get to spend more time with your kids and your spouse. You get to prepare mealtimes together. You don’t need to send your little kids to daycare. You also save on other expenses since you can bring the kids to school. You’ll also have more time to do household chores while your kids are in school. You can easily manage your work schedule. You work at your own pace. You’ll find that there will be less pressure since you don’t have a superior hovering over just to check if you’re being productive.

Having an online business is also an advantage because you get to reach more people. You don’t get to cater to people in the US only but you can reach as far the other side of the globe. In this regard, you’ll need further assistance from a company that will offer an extensive education program in starting a home-based business. One that will help you from start to finish – from the planning stage to the implementation, and even help you with the marketing, that is what you need.

Most big name brands have been going online because they have started to realize that there is big enough market online. Even if you are just starting in the online business, you are in equal footing with the bigger companies since you are also given equal opportunity in reaching a wider audience. Having the right product and the right promotional and selling campaign, you’ll surely be a huge success in no time – unlike if you get stuck in network marketing or being a regular employee.

In starting your own online business, the key is in finding the right tools and acquiring the right education and assistance to be successful in this industry.