How to Deal with Unstable Income
Whether you run your own home-based company or you simply freelance from the comfort of your home office, you may have noticed one downside to an otherwise win-win situation for moms that want to work even as they raise a family. Although you are granted a flexible schedule that allows you to juggle mom-duty with business requirements, and you have given up commuting, the trade-off is, unfortunately, a rather unstable income. Building up a business and a base clientele is no easy feat, but even once you have established yourself and begun to see repeat customers, you can never really count on a steady income. This can quickly go from a gray cloud on your sunny horizon to a very real storm if it begins to affect your ability to meet your financial responsibilities. So how can you deal with an income that goes beyond your wildest dreams one month and flat-lines the next?
For starters, you’re going to have to take a minimalist approach to your budget. Just because you do incredibly well one month (or even for several months in a row) doesn’t mean you can expect the same in the long term. Instead of seeing the increased income as an excuse to spend more, you should exercise caution and save for a rainy day. The standard recommended savings is three months. That means you should have enough money in your account to cover three months of bills (for both your home and your business) and that you should leave that money untouched in case of emergency. Once you have reached that point, you can definitely consider using excess funds to ramp up your business or buy the new car you need, but until you have your nest egg in place, spending should be kept to a limit.
However, if you’re doing well, you don’t need to be a complete miser. After all, you’re working for a reason: so that you have the funds you need to care for your family. As long as you’re careful and use sensible planning, there’s no reason you can’t parlay a successful income into something bigger and better. In the beginning, the majority of excess monies should be funneled back into the business. The more you can do to bring in clients and deliver quality products or services in a timely manner, the better chance you have to realize continued growth. But you have to be smart about how you spend. Don’t be too quick to hire on employees, purchase new equipment and software, or lease out an off-site office space. These unnecessary expenses will cripple you if your income falls, so make sure you have enough reserve funds to cover these assets before you invest in them.
The trick to weathering the ups and downs of an unstable income lies in careful planning. While it can be difficult to forecast your month-to-month income when you are first starting out, over time you will no doubt begin to see patterns in spending within your particular niche. And as you build up a book of regular customers by delivering superior products or services, you may begin to be able to count on at least a minimal monthly income. As long as you set aside enough savings to cover you in the lean times, you should be able to keep your business afloat or even secure rapid growth, despite the fact that your income fluctuates.
Jennifer Kardish writes for TheWoodlandsTX.com, your local guide to the best in shopping, dining, entertainment and more!
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