If you are working from home it is very common that you don’t have a fixed income. Telecommute jobs usually look for flexible workers and it means flexible incomes. Each month you get as much money as you work, and sometimes the workflow is not so high nor it is your income.
How to be ok with your finances in this scenery?
First, you need to create a budget. Maybe you don’t have a fixed income, but I am sure you have some fixed costs. Creating a budget will help you understand your financial situation better and then create an emergency plan in case difficult times come.
Let’s do it simple. A budget has two big sides: Incomes and costs.
Having an accurate idea about your costs
Costs are easier to calculate. Of course sometimes can happen unexpected costs, but it is not an everyday problem. Let’s focus in the costs that you already know you will have.
Make a list of your costs. Order them regarding its importance. This doesn’t mean that bigger costs are more important than little ones. Put the costs you need to have first, regardless their amount, and the ones that you can avoid in the end.
Now that you have your costs ordered. Take a look and make a line under the last costs that you think are unavoidable. The costs above the line are your fixed costs. The rest are variable costs and you should be able to stop them in case you need it.
Doing this in a situation in which you are not pushed by the need to cut your costs, helps you to be more objective about the ones you can or can’t remove.
Looking the income
No it is time to think about your income sources.
Create a list with your income sources, and try to figure out how much is the average income you get from each source and how much it can vary each month (100% … 20%).
For example you can have a client that sometimes asks very big projects, but that is not regular in his demands. Imagine this client have asked you three works in last year for $1000, $400 and $1000. If you work 12 months per year this means you get $24000 in the full year and $200 per month from this client. However, the income from this client varies 100%. Other client could have tasks every month, for instance $100, and the variation rate could be 0%, if each of the 12 months in the year you have received $100.
With this work, you have a better idea about who are your clients, what is their seasonality and which ones you can think about as fixed income and which ones not.
Of course, nothing is secure in this life, and you always have to work to get brand new clients, but have a clear idea of your situation only can help.
With this little exercise you can think in your finances in a much more accurate way.