How to Manage Expenses on an Irregular Income as an Entrepreneur

As we shift into full time entrepreneurship, we lose the stability of a consistent pay cheque with a set amount of money. For some, this can really stress you.

Today’s post will provide some tips and tricks to help manage your expenses when the income is not guaranteed.

Pay Yourself a Set Income

I’ve been there before, when my business is going great, I would spend what I profit from my business and don’t take into effect that I have no scheduled income coming in the next month.

So picture this, one month I am spending freely and the next, everything is going on credit because I don’t have money set aside for my monthly expenses.

Start implementing an income for yourself each month. I know as an entrepreneur, we want the unlimited income but until we have a base amount of money coming in each month guaranteed, paying yourself that set income will help you get through the lows in your business.

When you look at your reporting, you will see that one month is positive in your business but your next will have a loss – that’s okay!

By using this method, your net worth will increase and you will be able to ride out the waves of entrepreneurship.

Complete a Spending Plan

By creating a spending plan for yourself, also known as a budget, you can see how much money you have to spend in each category. You can create a vacation fund or clothing fund or something that you love to spend money on. With these funds, you are able to spend without feeling guilty as you’ve already allocated the money as you need to and you’re not going into debt for these luxury items. 

By instilling a spending plan, you are able to watch where your money is going without feeling restricted. 

Create an Emergency Fund

By having some money set aside for rainy days, you are able to weather the bad months. As your income is more irregular, I recommend having a larger emergency fund (ideally 3-6 months). 

I know when starting out, saving up that amount of money can feel overwhelming (especially if you have some debt) but you can build to it. When you build up the emergency fund, try to keep the money there for emergencies only. This isn’t a fund to spend on a vacation just because you have the money there, this is a fund that is there for critical things.

Know that small little steps will get you where you want to be and before you know it, you will have the full emergency fund built up along with a concrete spending plan. 

Let me know in the comments below, what tip you are going to implement today or what is one thing you consistently do to manage your income?