Managing your money is tough enough when you know exactly what you'll be making each month. When your income is variable, you have to deal with an extra layer of complexity. That's where this tip for a variable savings plan comes in handy.
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We've talked before about how you can improve your budget when you make a variable income by paying yourself a wage based on expenses. When planning savings, financial blog Wise Bread recommends creating a variable savings plan, as well. It's a fairly simple process:
- Determine what percentage of your overall income you want to save.
- Estimate your lowest income month and calculate what your savings should be for that month. You can do this based on previous years or estimate by projects you know are upcoming.
- Set up an automatic savings plan to automatically deduct the amount you would save in your lowest-earning month.
- Make additional manual contributions each month when you earn over your low benchmark month's earnings.
Check out the post at Wise Bread for the full instructions and examples.