Not everyone has a pay cheque dropping into their account like clockwork weekly or monthly. Farmers know this better than most. Having an irregular income – inconsistent or variable – certainly makes managing your money a little more complex and requires discipline.
If you’re a farmer, self-employed, freelancing or working on a seasonal, casual or commission basis, your income will probably vary from month to month. There might be no income at all during some times of the year, and then you may have bumper income in certain months. So, what is the best way to deal with fluctuating pay and still meet all of your living costs or deal with emergencies if they arise?
Karl Cronin, the national spokesperson for the Money Advice & Budgeting Service (MABS), works with North Connacht & Ulster MABS in Cavan. While he admits it can be a “balancing act” when budgeting a variable income, flexibility, priorities and planning are key. Here are some of his top pieces of advice.
1. Get the statements out
The first step is you need to look at a financial year to get an understanding of when your income is coming in – when you have good income, when there is less income and when there are months with no income at all. Once you’ve identified what you have from a 12-month period [from bank statements] divide it by 12. You’re breaking it down to get your average income every month even though it’s not coming in that sequence. MABS has a free My Budget tool on mabs.ie.
On the other side of your bank statement, look at your outgoings and see what are the months where you have big outgoings. For example, a typical one for all of us is a big heating or electricity bill around the winter months – that needs to be budgeted for. For people with irregular income, they need to plan for that throughout the entire year because they can’t just rely on income over the winter months to meet that big bill.
2. Plan ahead
When you have pulled out the bigger expenditure items, you need to budget what is coming in beforehand to have the money ready for it when that expense is due for payment. Not only do you have to budget for the day-to-day expenses – your food, light or heat, your car, rent/mortgage and medical bills – but you also have to think, for example, if there are children going back to school in September. Maybe you don’t earn in July or August, or you have very little income coming in; then you need to be planning for those expenses in March, April and May. It’s very much about matching up timings when you know you are going to have significant outgoings.
3. Emergency fund
It’s always a good idea to set savings aside for unforeseen expenses that crop up, whether that’s an appliance in the house that needs to be replaced or car repairs or something that catches you off guard. You certainly need to build up a small buffer fund to deal with those small emergencies because it’s inevitable they will arise. When they do, you have your savings fund there for them. You can spend your savings fund on that repair and then you can start it again next month.
Karl Cronin, the national spokesperson for the Money Advice & Budgeting Service (MABS), works with North Connacht and Ulster MABS in Cavan. \ Colm Mahady/Fennell Photography
4. Can supports help?
If there are times when you don’t have income coming in, for example, your work is seasonal and you might not have anything over the summer months – then it is important to check if there are any payments that you might be entitled to if you’re not getting an income or not employed for three or four months of the year. Make a call to the Citizen’s Information Office (citizensinformation.ie), explain the nature of your work, and see if there is a payment you may be entitled to. That would be pertinent to Special Needs Assistants (SNAs) or casual tutors who get tutoring work during the academic year.
If there is a constant shortfall and the household isn’t able to put money aside for an emergency fund and something does happen, link in with your local Intreo office about accessing an Exceptional Needs Payment (ENP), a one-off payment that comes from the Department of Social Protection to help with something needed in the household, be it an appliance or urgent car repairs to get that person to work.
5. MABS can help
At MABs we don’t see enough of the budgeting element [coming in]. We generally see people who tell us they have just been told they are going to be made redundant or there is going to be an income shock in the household or there is a problem [with debt] and they need help.The earlier we see someone, the better because we can sit down and work out a plan before it becomes a problem, or if a problem is anticipated, we can look at ways to work around it.
It might be a case that someone needs a free one-off appointment to get a grip of their budget to see what they actually have every month coming in and going out and what they need to set aside for the essentials. Then what’s left, you either save or use as discretionary money to spend.
We also collect tips from clients who come in, and one lady told us last year that when she brings her Re-Turn bottles back to her supermarket, she gets the voucher and puts it straight on to a gift card for that store. This year she had over €200 [for her Christmas shop].
See mabs.ie
Not everyone has a pay cheque dropping into their account like clockwork weekly or monthly. Farmers know this better than most. Having an irregular income – inconsistent or variable – certainly makes managing your money a little more complex and requires discipline.
If you’re a farmer, self-employed, freelancing or working on a seasonal, casual or commission basis, your income will probably vary from month to month. There might be no income at all during some times of the year, and then you may have bumper income in certain months. So, what is the best way to deal with fluctuating pay and still meet all of your living costs or deal with emergencies if they arise?
Karl Cronin, the national spokesperson for the Money Advice & Budgeting Service (MABS), works with North Connacht & Ulster MABS in Cavan. While he admits it can be a “balancing act” when budgeting a variable income, flexibility, priorities and planning are key. Here are some of his top pieces of advice.
1. Get the statements out
The first step is you need to look at a financial year to get an understanding of when your income is coming in – when you have good income, when there is less income and when there are months with no income at all. Once you’ve identified what you have from a 12-month period [from bank statements] divide it by 12. You’re breaking it down to get your average income every month even though it’s not coming in that sequence. MABS has a free My Budget tool on mabs.ie.
On the other side of your bank statement, look at your outgoings and see what are the months where you have big outgoings. For example, a typical one for all of us is a big heating or electricity bill around the winter months – that needs to be budgeted for. For people with irregular income, they need to plan for that throughout the entire year because they can’t just rely on income over the winter months to meet that big bill.
2. Plan ahead
When you have pulled out the bigger expenditure items, you need to budget what is coming in beforehand to have the money ready for it when that expense is due for payment. Not only do you have to budget for the day-to-day expenses – your food, light or heat, your car, rent/mortgage and medical bills – but you also have to think, for example, if there are children going back to school in September. Maybe you don’t earn in July or August, or you have very little income coming in; then you need to be planning for those expenses in March, April and May. It’s very much about matching up timings when you know you are going to have significant outgoings.
3. Emergency fund
It’s always a good idea to set savings aside for unforeseen expenses that crop up, whether that’s an appliance in the house that needs to be replaced or car repairs or something that catches you off guard. You certainly need to build up a small buffer fund to deal with those small emergencies because it’s inevitable they will arise. When they do, you have your savings fund there for them. You can spend your savings fund on that repair and then you can start it again next month.
Karl Cronin, the national spokesperson for the Money Advice & Budgeting Service (MABS), works with North Connacht and Ulster MABS in Cavan. \ Colm Mahady/Fennell Photography
4. Can supports help?
If there are times when you don’t have income coming in, for example, your work is seasonal and you might not have anything over the summer months – then it is important to check if there are any payments that you might be entitled to if you’re not getting an income or not employed for three or four months of the year. Make a call to the Citizen’s Information Office (citizensinformation.ie), explain the nature of your work, and see if there is a payment you may be entitled to. That would be pertinent to Special Needs Assistants (SNAs) or casual tutors who get tutoring work during the academic year.
If there is a constant shortfall and the household isn’t able to put money aside for an emergency fund and something does happen, link in with your local Intreo office about accessing an Exceptional Needs Payment (ENP), a one-off payment that comes from the Department of Social Protection to help with something needed in the household, be it an appliance or urgent car repairs to get that person to work.
5. MABS can help
At MABs we don’t see enough of the budgeting element [coming in]. We generally see people who tell us they have just been told they are going to be made redundant or there is going to be an income shock in the household or there is a problem [with debt] and they need help.The earlier we see someone, the better because we can sit down and work out a plan before it becomes a problem, or if a problem is anticipated, we can look at ways to work around it.
It might be a case that someone needs a free one-off appointment to get a grip of their budget to see what they actually have every month coming in and going out and what they need to set aside for the essentials. Then what’s left, you either save or use as discretionary money to spend.
We also collect tips from clients who come in, and one lady told us last year that when she brings her Re-Turn bottles back to her supermarket, she gets the voucher and puts it straight on to a gift card for that store. This year she had over €200 [for her Christmas shop].
See mabs.ie
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