- Salesman on commission
- Business Owners
- Anyone who doesn’t get paid on a regular schedule
A common problem in personal budgeting is dealing with variable income. Variable Income makes budgeting a really confusing and frustrating topic for people trying to get a handle on their personal finances. Whether you are in sales receiving commissions or you run your own business where your pay varies, zero based budgeting can still work for you.
However you won’t budget by month or every two weeks. You will only be able to budget as far ahead as known.
This is precisely why our budget tool does not need you to enter a pay frequency or select a pay period. We simply have a pay period date. This allows you to choose when the budget starts. You could literally make a new budget every morning when you wake up (if you were so inclined).
If you know you are receiving pay tomorrow and know how much, sit down that night and work out the zero based budget for that income. If you don’t know or have time to do the budget before you receive the income, then do it as soon as possible after receiving the money. The key is to make the decisions before the money and time decide for you.
As for expenses, write out the expenses that you know are coming up and rank them. Highlight the ones that are due soonest or are most important. Obviously rent is more important than getting a new stereo. Work through these expenses, add in any savings for retirement, a new car, etc. until you have zero remaining.
Zero based budgeting can work for folks with variable income. In fact I believe it works nicer than most budgeting techniques for dealing with variables (income or expenses). Zero based budgeting seems like such a tough and rigid form of budgeting but you will find that it is much more free and easy than most other budgeting systems.
Read our post What is Zero Based Budgeting and How Our Free Tool Can Help if you are new to zero based budgeting.
Leave a comment below and talk about your successes or failures trying to budget for variable income.