Variable Income, Dreaded Red "Overspent"
I'm really struggling to feel good about my budget when my income is so incredibly variable and I seem to always be in the dreaded "Overspent" red when I try to anticipate expenses.
I guess my question is: what is the best way to handle expenses that you know are coming up, but there is no income to spend? I need to know whether I should be pre-budgeting and allowing myself too be in the red, or just not even touch my budget until income does come in ...
The cycling that I seem to be in is: income comes in, i spend it, then i retroactively update my budget ... unfortunately the age of my money right now is either 0 or negative and there is no way to get out of this cycle at the moment.
Orange Zebra said:
just not even tough my budget until income does come in ...
However, you want to always be able to look at the budget when planning your spending, regardless of your income schedule.
How are you paying for things right now until the Income comes in? Credit?
Orange Zebra said:
what is the best way to handle expenses that you know are coming up, but there is no income to spend? I need to know whether I should be pre-budgeting and allowing myself too be in the red, or just not even touch my budget until income does come in ...
This is a great question. First, it is stressful to be in this cycle. What you're feeling is valid. (Many, many of us are there or have been there!) And, you can move forward confidently. 🧡
For the most part, we're taught that forecasting like you're describing (looking ahead, anticipating future expenses) is budgeting. When we forecast, though, we can't really grapple with all the variables (we're only human after all!). We end up making decisions based on incomplete or imaginary information—and we stress out.
Instead, I suggest embracing YNAB's Method to get out of this cycle:
1. Give only dollars you have on hand now a job. Then stop. Don't go in the red. This prioritize guide can help you determine how to budget the dollars you have on hand now.
2. Create categories for all of those upcoming expenses and put goals in the categories so you know what you'll need to fund every month as more money comes in. Use that money to cover immediate expenses, then save incrementally for future expenses.
3. When you need to move money to cover overspending, that's ok. It's good to be flexible! And, it's helpful to get in the habit of looking at your budget before spending. This practice can be liberating instead of restrictive (because, hey, it was you who decided how to spend that money! You're the king of your budget!).
4. Each month, if you can set aside money for future months, do it. It will help you feel less stress over time to have extra dollars sitting in your account ready for next month.
You asked if you should just "not touch your budget until money comes in." I think you should budget what you have on hand now, take Move Light's advice to prepare your budget for the incoming money by setting goals/etc., then actively engage with your budget as a partner until more money comes in. If you rinse and repeat, I think you'll feel less restricted.