This issue applies to me especially, but I knew many of you also struggle with budgeting when you are self-employed. Jean Chatzky advises that you plan of cushion of six months if possible.
Q: How do you budget if you are self-employed? We may have an influx of cash one month and then very little the next. I don’t know how much to keep in our checking account, just in case we don’t make any money the next month. I don’t want to stash too much in a low-interest checking account, but I may need access to it quickly. — Amy in Louisiana
A: You’re right Amy, it’s difficult to budget if you don’t know how much is coming in each month, but it’s not impossible. First of all, just because you need accessible cash doesn’t mean it has to sit in a low- or no-interest checking account. You can find savings accounts with low deposit limits and interest rates in the 3 percent range, and you’ll have easy access to your money if you need it in a pinch.
Aside from that, in terms of balancing the months that net bigger paychecks with those that don’t, it’s all a matter of planning.