Personal Finance

Managing an Irregular Stream of Income

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One of the most stressful aspects of running your own small business can be having to manage an income that is not consistent. It doesn’t matter if it is the economy, weather, seasons changing, or even just serendipity, you can easily go from famine one month to feast the next and vice versa. How do you deal with this? Here are a few strategies that can assist you in staying afloat in this choppy financial sea.

Payday Loan Alternatives

This is one good way to make it from one month or pay period to the next. Payday alternative loans are quite easy to qualify for. All you need is a social security number that is valid, a checking account that is active, and a place of employment that can be verified. You will be able to borrow up to $1,250 and the terms for paying it back are quite flexible. These are great when you need cash fast because once you are approved, you can have the money in your account as soon as the very next business day.

Credit Cards

Yes, it is true that you might be able to make it from one month to the next by using your credit cards. However, this can lead to you being in even more debt. You will need to have a budget and stick to it so that you will be able to reduce your credit card debt while you are also controlling your spending. Believe it or not, budgeting isn’t just for people who have steady streams of income. In all honesty, it can be even more critical for someone whose income isn’t steady at all. You can create a budget by determining your average income and using that as a guideline. You will also need to make a list of your expenses. Then, you will need to determine what you can spend on which expenses and what, if anything, needs to be cut down or out completely.

Keep Business and Personal Finances Separate

One way to better manage irregular income is to make sure that you keep your business and personal finances separate. Any accountant can tell you that this is necessary. It will make your record keeping, and even preparing your taxes so much easier, but doing this can also help when it comes to arranging and managing your finances. If you happen to have a system for accounting that is online, consider syncing your business account with it while setting it to automatically import and then track any expense transactions. This can provide you with a dashboard type view of your flow of cash. If you also happen to be working with a CPA or a tax preparer, this can make getting the reports that they will need that much simpler.

Set Money Aside

In addition to your business account and your personal account, you should also have a savings account. When you experience good times financially, you can put any additional income into your savings account. Then, when you fall on hard times, you will have something to fall back on. Your goal for a savings account should be anything from 3 to 6 months of what your net income typically is. You will be able to use this savings account so that you will have money for things like dental or medical emergencies, car repairs, emergency expenses for your home, such as a fire or flood, or even for expenses that might be related to bereavement.

You might also want to have a long term savings account in place. This could be a separate savings for things like down payments for new property, a retirement fund, or even a college fund for your kids.

Be Thrifty

We all face temptations to spend more than we have. Having an income that is erratic can do wonders when it comes to teaching you how to have and maintain a lifestyle that is cost effective. You can do this by looking for ways to save money on everything from business to personal expenses. You will also need to be careful with credit. Credit cards offer up their own temptations, but you should never charge more than you will be able to pay off when the bill comes in.

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