Guest Post by Michelle.
As a Christian mom and wife, I am consistently seeking out the best for my family’s minds, bodies, and
spirits. A Proverbs Wife has invited me to share a glimpse of what I’ve learned from our financial journey.
BUDGETING A VARIABLE INCOME
My husband and I began our financial journey a little over two years ago. My husband has a variable income and I stay home. Learning to budget a variable income has been the greatest reward and biggest challenge. Each month is a work in progress. Since my husband has made the same annual salary for two years now, we base our income on the monthly average. I have heard that some people budget based on their last month’s income. This sounds great but I don’t think it would work for us. With a variable income, it can be higher at times and lower at other times. As a result, we save for the winter months during the summer. If you have a variable income, decide which method would work best for you.
SAVING FOR THE LEAN MONTHS
Starting a designated savings account for our “over/under”
weeks, has helped us stick to our budget much better. If one week is
over the weekly average, we put the excess in that savings account. The next week that is under the average, we pull from that savings account.
CONSIDER MULTIPLE ACCOUNT
Recently, I have opened up accounts for non-monthly bills. We now have a checking account to pay bills, a checking account for variable
expenses such as groceries and gas, our over/under savings account, a
Christmas savings, a non-monthly bills savings which cover things like haircuts, clothes, subscriptions, etc. We also have a designated account for tax savings (quarterly and property taxes), and an account for our emergency fund savings.
BEEF UP YOUR EMERGENCY FUND
Getting the $1000 emergency fund savings funded is the first crucial
step after getting your budget balanced. Protect those funds like a new born baby. Only use them if it is a true emergency. You will recognize a true emergency by the twist in your gut. If you use any of the funds, get them back in there as soon as possible. It is the first step to getting out of the devil’s grasp. Having an emergency fund combined with an honest, zero balanced budget will help you take control of your finances.
FINAL TIP: STAY MOTIVATED
We are steadily paying down debt each month now, and I have begun
to chart our balance to keep up our motivation. At the current pace, we should be completely financially free in five years.
Our goals come from Crown’s Money Map (www.crown.org).
This is part 4 of a 5 part debt freedom series.
Part I- 5 Habits That Are Probably Keeping You In Debt
Part II- Is Keeping Up With the Jones’ Keeping You In Debt?
Part III- Put the “BUDGE” back in Your Budget!
Part IV- Guest Post: My Financial Freedom Strategy
Part V- 4 Valuable Lessons I Learned from Being in Debt