Six ways you can stablize your monthly income (even if it’s unpredictable)

While many people would choose to earn a stable income each month, this isn’t always achievable, especially if you’re a freelancer or entrepreneur.

As much as you’d love to have control over your income, you may find that you’re at the mercy of the current work market, and your clients or customers’ budgets or need for what you offer.

So how do you maintain some sense of predictability over your finances, and ensure you’re not panicking about covering your expenses in quiet months? To help you, here are six ways you can stabilise your income – even if it varies.

1) Consolidate your debts 

One of the biggest worries for people with unpredictable incomes is paying off debts, such as credit card repayments, every month.

However, paying off debts is often much easier if you can make one single repayment each month, and reduce the interest rates on this debt.

It’s possible to achieve this through debt consolidation, which involves taking out small online loans to replace several debts, and combine them into one larger, single monthly repayment. 

2) Create a budget

You can also take some of the uncertainty out of a variable monthly income by creating a budget that suits your unpredictability.

You can do this by budgeting for the lowest possible income, which you can predict by looking back at previous wages or income. You also need to plan for your monthly budget by knowing the costs of your fixed expenses, and adjusting your finances to pay these upfront.

It’s important to think ahead when budgeting, such as predicting where there may be dips in your income – for example, if you are on vacation. 

3) Project your cash flow 

Another way to stabilize your monthly income is by projecting your cash flow over time, which will allow you to make more accurate plans when it comes to financial budgeting.

You can project your cash flow through using finance and budgeting apps that monitor your spending. Or you can develop your own system by pitting your expected income against your expenditure.

You should update this as regularly as possible to reflect any changes to your income. This will allow you to determine any changes that you need to make to your financial situation, such as taking a part-time job with a regular wage, before issues occur. 

4) Build up your savings

If you don’t have one already, make sure you have an emergency savings fund to boost your income in emergencies.

This will ensure that your income is stabilized by smoothing over any dips in your salary (or unexpected expenses, such as your car breaking down or a fine).

To build up a savings account, just put aside a little each month through a direct debit, and add more in periods where you are earning more than you need. 

5) Improve your credit score 

Improving your credit score can also help to protect your income by reducing the interest rate you’ll be charged on bank loans and other expenditures. You can check your credit score on Experian.

6) Prepare for taxes

If you’re self-employed, make sure you put aside tax money each month so you don’t get a shock when it comes to pay your tax bill (especially if it comes in a tough financial month).

Photo by Sharon McCutcheon