When it comes to the people who receive a fixed income every month, there is nothing challenging for them in estimating their payments for the next period. Even though budget planning is recommended for everyone, many of these individuals, especially the ones who are not prone to overspending, can actually make do without any detailed financial plans.
The situation is absolutely different for the people whose income is irregular. While it might be especially difficult for them to plan their budget, it is particularly recommended in their case as this practice will help them to protect themselves from serious financial crises.
The three levels of expenses
The estimations can be on the three levels and the lowest one has the greatest importance for budget planning in the case of the people with irregular income.
You can easily count how much money you will need to live the most basic lifestyle including the expenses for the most necessary things.
The next level will be the comfortable lifestyle which includes entertainment as well as more expensive purchases without you can actually make do. The final level is the perfect time when you do not have to worry about anything at all and not save money.
Getting the exact sum of income
Certainly, there is no exact sum since you do not know for a fact what will happen in the future with your work, however, you can see the estimations for the year.
Now, you can divide the total into twelve months which will show you the amount of money you can keep in mind every month.
If you compare the final sum to all of the three levels of expenses for different lifestyles, you will get an image of the level of life you can afford right now.
The lowest level means the situation in which you are literally struggling with earning money for some reason. This can happen if there is a poor season for the kind of the work you are doing, the increase of rivalry on the market or even your own poor health or family conditions. As you can imagine, the situations can be absolutely different so it is crucial to get an approximate minimum amount of money you will be able to get in case when everything will go wrong.
The next level is an average amount of money you are earning where there no particular ups and downs in your career whereas the last level is what you can achieve if there is a more auspicious situation on the market or you yourself become more efficient with your work.
Make the correction of your budget
Again, you are aware of the fact the estimation you have just made is just an estimation. For that reason, you should be able to make corrections on the go.
There might be different situations in your life. For example, you might have just received a large amount of money for the project you have just finished which might make you feel like you can afford everything. If you are well-aware of other sources of income you have right now and check the plan for expenses, you might found out you will have to spread this large sum on several months.
Another common situation is cooperation with a client who is paying you quite a lot of money so you can live the life without any specific financial limitations. Still, you should be prepared to the moment when this person will finish all of the projects with you and you will need to switch to a more moderate level of expenses.