3 Ways to Handle Your Random Income
A friend recently asked me for suggestions on how to approach his unique situation when he budgets. He has multiple sources of income outside of his main gig, and he never knows when, how much, or even if the money will come at all.
We are all aware of the term “irregular income”, referring to income that fluctuates from month to month, perhaps as a result of a job in sales. But this is beyond that. Let’s call this raNdoM income. (See what I did there?)
You may be in this position if say, you pick up freelance or consulting jobs here or there, sell crafts, receive royalty payments, or have other streams of income that aren’t your bread and butter (yet). You don’t quite rely on this income to maintain your household.
First, let’s agree that even though there is a lot of uncertainty around this type of income, one thing is for sure – if you do not account for it, it will disappear. If you don’t have a plan, this income will automatically fund your miscellaneous category, and you’ll forfeit the potential of it making any impact at all on your situation. It will be as if you never had it. So, let’s look at a few ways to maximize your awesomely random income.
1. Let it accumulate throughout the month and consider it next month’s income
By letting the income accumulate, you eliminate the possibility of it disappearing. The entire amount is rolled into the next month’s budget where it can be spent/saved with purpose. I am highly in favor of this approach because it removes the unknown from the situation. You will know exactly what amount you’re dealing with when you go to do the next month’s budget.
2. Earmark your random income for a single purpose
Define a goal for this income: debt payment, vacation savings, charitable donation, etc. When the money comes in – and as soon as it comes in, whether it’s $20 or $200, it goes specifically to that purpose.
3. Grow your side gig
If your income is coming from a business or hustle that you want to grow and develop, consider reinvesting your earnings right back into it by using the money for supplies, tools, resources, or training.
Your exact goals and of course, just how random your random income is, will determine which is the best path for you. The key is to define clearly where the money will go. Whatever you did to generate the income required some effort on your part. You deserve to see the fruits of your labor!