Increasingly today, there are many Brazilians who are self-employed, mainly through constant crises and mass layoffs. Self-employment can often mean a variable monthly income, where income comes at different times of the month and in varying amounts. Budgeting a variable income can be a challenge at times. However, you can plan this, check out the following:
1. Start with a budget in mind
See your income in the last year. Create a list of all your expenses, starting with fixed bills such as rent, insurance (health, home, car and any other), loans, credit card bills, car payments, food and retirement. You can list your expenses manually is the best way. Other options include entering your expenses into a free financial planning application such as MoneyCare, simple, yet meets the needs.
Make two columns, in the first place your expenses, in the second, the value you want to assign to this. For example, if you are late on a credit card account and have an attached late fee, your immediate payment may be higher. Then take a look at your annual expenses. What are some of the expenses that you have every year besides your monthly bills? Finally, look at the additional expenses you may incur, such as travel, entertainment, clothing, shopping or other things that you buy. Consider any emergency expenses that you have had previously that you did not plan or expected. Write down all the expenses that you may think, so you will have a complete picture of your actual expenses every month and throughout the year, this will help you to define what your actual budget needs.
Now, take a look at your spending list, prioritize them. What is essential and should be paid immediately? What is desirable but not necessary? Put dates next to your expenses. Put “urgent” at the top, followed by “important” and “desired but not required” at the bottom. Now look at your list again. You should be able to see what is truly relevant and what expenses you can expect. This will help you identify what your budget is for possible priorities and how much space you have in your budget every month for any additional expenses.
3. Pay by Priority
As you receive income, make payments by lowering your list by priority, covering your essential expenses followed by food, transportation, insurance, and any other immediate expenses. If you can not cover all your expenses, when your next payment arrives, continue your list to the next item to be paid. Once you have fulfilled all your expenses, if you make extra money, you can use this money in several ways, including saving money, paying off debt or buying something you want.
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