You don't need to have a 40-hour work week to create a budget that makes your money work for you. In fact, if your pay varies based on commission or how much you earn in tips, that's all the more reason to have a sensible budget in place. Here are a few strategies to build a smart budget that makes the most of your part-time income.
You may have a good idea what your average paycheck might look like, but what about all your paychecks? What are the biggest factors in determining how much you make? Maybe you worked 35 hours this week but only 15 last week, or perhaps you earn more in tips on nights and weekends. Keep track of your pay for at least 3 months in order to spot patterns and determine your average weekly income.
It's a whole lot easier to add money into your budget than it is to cut it out, so by determining the amount of your lowest paycheck, you determine the minimum amount of money you need to cover your expenses. By anticipating the lean periods, you can determine the amount you need to save during your flush periods. Understanding your financial strengths and weaknesses is at the heart of tip number one, and it also leads perfectly into tip number two.
If you're always on the look-out for good opportunities to earn extra money, you may already be picking up extra shifts to help out coworkers and make a good impression on your employer. Be sure to be on time for all your scheduled shifts, and try to be the person your coworkers and managers go to when they need coverage. This go-getter attitude will look great when you are up for a promotion or raise.
Once you have a better idea of what your average income is over time, you can begin allocating your money into different categories. Start with the things you can most easily account for, especially any fixed recurring monthly payments like rent or car payments, and give yourself a reasonable budget for gas, groceries, and other variable expenditures. That generally means cutting out expenses wherever possible, like limiting your Starbuck's budget to $10 a month or skipping Wendy's on your lunch break.
Subtract your monthly spending from your minimum income for that month. If you're still in the red when all the math is done, you may want to ask yourself how often or why this is happening and look for problematic spending patterns. If it's a consistent occurance, consider some side work to avoid relying on title loans; a few hours of driving for Uber or doing freelance work may help you bridge the payday gap.
Some expenses aren't quite as predictable, but that doesn't mean you shouldn't try to account for and anticipate them. If your water bill is draining you, or your power bill has you feeling tapped out, look for ways to minimize your consumption. After all, a penny saved is a penny earned, especially when you're on a tight budget.
The only thing that is constant is change. Your financial needs don't always match your financial means, so flexibility is the name of the game - but how do you build a budget that can adapt with a variable income? The short answer is, you don't. The trick is to make two budgets: one to use when it's time to tighten the belt and one to use when you can afford to loosen it.
When you have plenty of money in the bank, it can be tempting to let your budget slip, but that's where the "Budget A" comes into play. That's your budget you use when everything is A-OK. Save-save-save while the saving's good, spending occasionally on recreation, but devoting most of your discretionary budget to building up your rainy-day fund.
"Budget B" is meant to help you successfully make it through the tight times. Instead of saving when times are tight, keep your essential needs front-and-center and make sure those are covered before you spend on anything else. Maybe there's a fast way to capitalize on your skills and knowledge with a side hustle to avoid dipping into your savings or using your vehicle to get a title loan.
When you don't know how many hours you'll work next week (let alone next month), it's hard to know what you can and can't afford. But having less money to spend makes how you spend it even more important. Keep your finger on the pulse of your finances, maximize your earning, and prioritize your expenses to help you create a budget for the best or times and the worst of times so you can keep rolling with the punches no matter what comes your way.