How to budget with variable income – 3 hot tips
Have you wanted to give up on budgeting because your income is variable?
Then this episode is for you!
Budgets and irregular income don’t mix very well. And it can make you think your business is failing – when it’s really not!
In this episode, I cover 3 practical and mindset shifts to help you budget with variable income – so you can get back on track.
We will cover:
- Why the rules are different in business
- 3 mindset – and practical – shifts you need to make
- The No.1 practise to keep your cash flow on track
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If you’ve wanted to give up on budgeting because your variable income just seems to make it impossible, I absolutely hear you. And you are definitely not alone!
Sadly, it can make you feel like your business isn’t doing well – when it’s actually doing fine!
The problem is that budgets work well when you have steady, predictable income – when you have a JOB. But as entrepreneurs and business owners, we left the security of the job because we wanted the opportunity to have unlimited income.
But the rules around money are different in business. Mostly, because of this variable income issue.
And so it simply requires a different approach – both from a practical and a mindset point of view.
That’s why we’re going to cover 3 mindset and practical shifts that go hand in hand to help you navigate your variable income and get back on track.
Over the years, I’ve definitely had a love-hate relationship with budgeting. In fact, I don’t even like that word – I mainly use it because people relate to it. I much prefer to talk about having a money plan and a system to help you implement it.
Budgeting is something that I tried on and off over the years. At times I felt like I didn’t need to budget because I had plenty of income. And at other times, I felt like I didn’t have enough money to budget!
But it was the period I spent utterly broke after my marriage split, that made me apply some of the principles which I then took into business… and which I still teach and implement today.
So the 3 things I’m sharing with you today are really helpful from both a practical point of view and a mindset point of view – whether your irregular income is because you have a business… or because of something else.
The principal idea that flows through all of these is that you need to know your numbers. And then you need to be willing to make real-time adjustments as you go!
NUMBER 1: Let’s talk about variable income.
It’s really critical that you smooth your cash flow as much as possible. Because if your income is on a roller coaster, the last thing you want is for your emotions to follow!
This is a common issue – especially for new business owners. They go on an emotional roller coaster that matches the income roller coaster.
They go from feeling rich to feeling poor. From celebrating to worrying. From congratulating themselves for firing the boss, to stressing out about paying the bills. Sometimes all in the same day!
And that’s not healthy for you and also not helpful to your business because if you’re feeling stressed and worried about money, you’re going to make decisions driven by fear and coming from a lack mentality.
And then energetically you’re going to attract more of the same. You’ll go into a downward spiral of negative thinking and won’t be showing up as your best self.
Clients and customers can smell that ‘Eau de Desperation’ – nothing makes them run for the hills faster!
I recently released an episode that shows you how to smooth your cash flow in just a couple of simple steps. It’ll be linked for you below so you can watch that next.
So you want to smooth that cash flow, and you also want to smooth the emotional rollercoaster and not have your inner world so linked to how much money came in today or this week or even this month.
Here’s a practical thing I did in my own business:
I made a decision and a promise to myself to never judge my business on anything other than the last 6 months average.
I recognized there would be a bit of a roller coaster and didn’t want to get sucked into that emotionally. So any time I was tempted to worry, I would just look at the last 6 months’ average. And pretty much every single time, everything was absolutely fine.
Smoothing your cash flow and smoothing your emotions about your income are two things that really go hand in hand.
NUMBER 2: Separation is Peace!
The next one is the principle that your business pays YOU.
A lot of people into business, still having the mindset of an employee. (I talked about this in a previous episode which I’ll also link below)
But the mindset of an employee has no place in business!
You need to start thinking like a business owner. And that means that you are both YOU with your personal finances… and you are also now in charge of the business’ finances. But the two are SEPARATE.
So you need to create separation between them and have your business pay you. From a practical point of view, be sure to actually put that in place. In Magnetic Money, we do our business income distribution every week. It only takes 5 minutes, but it’s critical to ensuring that your business keeps running and that YOU get paid so you can pay your bills.
The most important part of this process is smoothing your cash flow.
So from a mindset (and a practical) point of view, create that separation and always ask yourself, “Am I looking at my business’ finances right now – or my personal ones?”
Do you have that separation? Do you have separate bank accounts for your business?
Let me know in the comments!
See, you and your business are separate legal and ENERGETIC entities. So creating separation in the way you manage your money and in the way you think of it are both critical.
NUMBER 3: Plan & adjust!
Yes, you should be doing some forecasting. You should be planning your future income and expenses – doing those projections.
Where will your business income come from? How much do you expect? What expenses do you have ongoing & what others are coming up?
But it’s not set & forget! It’s a dynamic, ever-changing thing.
And because the income is planned – but not predictable – you’ll need to smooth your cashflow and adjust as you go.
So by all means, have a forecast, have a plan, but be sure to make real-time adjustments as you go…. so you can smooth your cashflow & reset expectations.
Here’s the practical way I would approach that, which will also address the mindset side of things:
Sit down to do your business forecast. Look at what your goals & plans are – and whether they’re achievable. Maybe you’ll need to raise your prices or sell more/other products and services to meet your goal.
Plan what you want to achieve.
You want to revisit that, say quarterly to make any adjustments. So that’s your planning.
But then you need to also track what’s ACTUALLY coming in and distribute that income properly. I recommend tracking weekly or even daily and distributing weekly.
This will help you reconnect with your money – rather than sticking your head in the sand, hoping for the best.
Tracking your income every day is also a very insightful mindset practice that allows you to notice your thought patterns around your income and business.
You will notice things like a worry pattern kicking in the moment you have one or two low income days. Or maybe that you start beating up on yourself for being ‘lazy’ and having taken the weekend off if your income dips.
These are amazing opportunities to find room for improvement in your mindset. They give you deep insight into the way you think about your business… and the way you talk to and treat yourself.
So the practice of tracking your income is handy because it helps you do your income distribution at the end of the week. But it’s also a really awesome mindset practice!
Above all else, please be as loving and kind to yourself as possible. If self judgment kicks in, just notice it and think, “Oh, look at that. I’m judging myself. I’m beating up on myself. Isn’t that interesting? I wonder what that’s all about? I wonder what I can do to shift and heal that, so I can start having a much better attitude about my abilities, my worth, my business, and start treating myself more kindly.”
These practical strategies are also amazing mindset strategies.
And between the two, you’ll be able to come to a place of beautiful new balance, where you have the right mindset to run a business successfully – and where you’ll have the daily practical habits that make you a successful business owner.
So those are 3 things I wanted to cover off for you today.
Again, my main message is to know your numbers, then make real-time adjustments as you go. Because when you’re operating a business, your income is going to vary. It’s going to fluctuate. That’s just how it goes.
Now, an important place to start is by getting your banking all sorted. So if you need a bit of help with that, be sure to grab my ‘Organize & Tidy Your Banking’ workshop at the link below. It’s free.
In this punchy 35 minute workshop we start to organize and tidy your banking so your money can flow more easily from your business into your personal accounts. We also cover some important principles – both from a practical and a mindset point of view – that will help you become a more successful and abundant-feeling business owner.
The link is below.
Before you go!
Did you enjoy this episode?
What did you learn? What’s your biggest takeaway?
Let me know in the comments below!
Remember that abundance is a state of being. And yes, it’s about money in the bank, but most importantly, it’s about feeling abundant, worthy, and loving life.
And that’s what we’re here to help you do. See you next time!
Ready to go deeper?
FREE LIVE WORKSHOP
Organize & Tidy Your Banking
‘Spark the joy’ of becoming magnetic – for women entrepreneurs.
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