Samuel Peery over at the Getting Finances Done wrote a great post last week with some excellent tips on “Budgeting on a self-employed or irregular income.” The info he outlines is some of the best advice I’ve seen for those working from home or looking to make a go at it:
Use cash for out-of-control categories – Since you may not know when your next paycheck will be, it’s more important than ever to keep a tight grip on variable expenses that tend to get out-of-control.
Build up a short-term emergency fund (STEF) equivalent to four weeks of expenses – A STEF will help smooth out the bumps inherent in an irregular income
Determine the timing and priority of expenses ahead of time – Planning the order in which expenses must be paid and allocated will relieve a ton of stress. You’ll know exactly where your income needs to go before you even get it.
Create a sample budget as a reality check and baseline – A sample budget helps to ensure you are not only living within your means but also achieving your high-level, long-term financial goals.
There’s a lot of valuable advice and good planning tips. Well worth a read.