If you earn a different amount each month, whether you are in sales, working contracts, or in transition, it can wreck havoc with your budget.

How can you be sure to pay the Must Pay bills and also have funds for other things like clothes, meals out, fun?

The best way is to tag the Must Pay expenses, like housing, transportation, utilities and groceries, and total that cost.  Whatever money you get this month, pay those bills first. If you earned $1,000, and your Must Pays total $900, pay those first. That leaves $100  for other life wants and needs.

Once you’ve gotten your Must Pays secured, the next step is to give a percent of the remaining income to all the other life categories you have.

If you haven’t already, now is the time to make a list of all the things you need and want in your life and give them a label. You’ll know what those are by checking what you’ve spent money on in the past. For example, Car Maintenance, Gifts, Hair.

Most people have anywhere from 30-50 categories.  Once you know how many categories you want to fund, you can decide what percent of the remaining money will go to each category. The only  rule is that this cannot add up to more than 100%.

Let’s say you have 30 categories.  You could start by giving each category 3%. That means 90% of the remaining money will be allocated.  With the last 10%, you can plunk it on a favorite category, or divide it among two or three.  Since not all categories are of the same importance to you, once you have 3% in each, you might want to subtract 1 or 2 % here and there and add that to a more important category.

For example, you may reduce Car Maintenance from 3% to 2%, saving up until the money is needed while Hair goes from 3% to 4% because your appearance is an important part of your job. You took 1% from Car Maintenance and added it to Hair. You’re happy to leave 3% in Gifts.

Now using the money leftover after you’ve paid the Must Pays, that $100 is divided into all your categories according to the percent you chose.  You would deposit 2% or $2 to Car Maintenance, and 4% or $4 into Hair, and 3% or $3 into Gifts.

No matter what your income, no matter how it varies, cover your Must Pay categories then you distribute the remainder of the money into all the rest of the categories using percents.

Share the wealth!

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