Self-employed with varying monthly income
Hello newbie here. Actually a second time newbie.(if that even makes sense). My wife and I are both self-employed with separate business that we are the process of building. As of now our monthly income varies depending on how the month goes. We are working to build to place of consistent income. I remember in my first go around with YNAB there was a place that talked about this scenario. Any input, suggestions or direction would be great as I start to set our budget. Thank you
Check out the blog series "Slaying the Variable Income Dragon" https://www.youneedabudget.com/slaying-the-variable-income-dragon/ which talks about this scenario. There is also now a class on pay cycles which addresses variable income situations: https://www.youneedabudget.com/classes/
That said, variable income basically boils down to this: you want to set aside income in the high months to see you through the low months. You do this by having a budget category where you stash money when you're flush, and you draw upon that money when you haven't earned enough to meet your regular expenditures. The easiest way to be able to do that is to get a full month ahead by hook or by crook, so that each month, you are facing budgeting the month based on what you earned the previous month. This enables you to identify whether the previous month was a "flush" month or a "short" month, so that you can decide how you want to fund or draw from your variable income category.
Hi Peter !
Welcome back to YNAB! :)
**WordTenor** is absolutely right. Going along with the links he posted, you might also want to check out our Variable Income Blog Series. :)
Please let me know if you have a more specific question about how to implement something!