How to budget on an unsteady income

Budgets aren’t only for people with regular pay cheques. When your income varies from month to month or even week to week, making and sticking to a budget is even more important. Follow these five steps to master fluctuating finances. Up to two-thirds of workers in Australia’s tertiary education sector are employed as casuals or on fixed contracts.[1] For casuals, that means your income can rise and fall like a disoriented butterfly depending on whether university or college is in session or not. Even if you’re on a fixed contract, there can be a lingering uncertainty about what to do when your contract ends. To feel more in control of your fluttering finances, making a budget is a valuable first step. These easy tips might just start smoothing out your financial ups and downs. 1. Start saving to spread the load Set up a savings account – your ‘buffer’ fund – to help navigate those lean periods. Determine the amount you should save each pay during your flush months, and schedule a transfer so it goes in as soon as your salary hits your bank account. And be tough with yourself. Don’t use those funds until you really need them. If you earn extra money from a side hustle put that into your buffer, too, until you have enough to carry you through the break. Try to get as high an interest rate as you can to grow the balance faster. Teachers Mutual Bank’s Target Saver account returns up to 5.50%p.a. variable interest (if savings conditions are met)2, and there are other savings accounts with $0 account-keeping fees3. 2. What are your essential expenses? Look at your bank and credit card statements and work out the baseline of your ‘must-pay’ expenses each month. You can use Teachers Mutual Bank’s budget planner. Include things like: rent/mortgage groceries utility bills car costs and travel minimum debt repayments, including credit cards. Divide annual bills, like your car registration, and any quarterly bills into a monthly amount. When you’re done, you’ll know the minimum amount you need to cover essential costs each month. 3. What else are you spending? Next, add up how much you’re spending on other things such as going out, takeaways, haircuts, gym membership, etc. You can work this out from bank statements, or use an expense tracker app for a month to get a precise picture of what you’re spending money on. Teachers Mutual Bank has a mobile app* that lets you track your spending across categories. The 50:30:20 budgeting rule suggests you allocate: half your take-home income for essential expenses 30 per cent on discretionary spending 20 per cent towards savings or paying off debt. But if your income goes up and down a lot, you’ll want to boost the savings ratio and cut down on discretionary spending – just for that peace of mind. 4. Plot your income Look at your bank statements to map your income for the past year. This will give you an insight into how much you earn and when. Jot down the good months and the bad. Next, forecast your income for the coming months. Highlight those months when you’re likely to earn less than you need to cover essential expenses. How much will you fall short? That’s what you’ll have to keep in reserve from your better paid months, or earn extra from other work. 5. Separate your money Now that you know how much you need for essentials, and how much you should put into your buffer, you can consider other financial goals. You may want to pay off a loan sooner, save for a stint overseas, a car upgrade or another exciting goal. Having separate accounts makes it much easier. You can set up one account to cover regular bills and expenses, have another everyday account with a debit card for your weekly spending money, and a savings account to start building towards a longer-term goal. That’s easy to do at Teachers Mutual Bank, as there are $0 monthly account fee on everyday banking and savings accounts3. Living off an uneven income isn’t always easy, but having a buffer account and a regular savings routine can do a lot to help you avoid financial stress. Teachers Mutual Bank | Bank differently Find out more about how you can boost your financial wellbeing today. Important Information All interest rates quoted are subject to change This information is general in nature and does not take your personal objectives, financial circumstances or needs into account. Consider its appropriateness to these factors before acting on it. Membership eligibility applies to join the Bank. Membership is open to citizens or permanent residents of Australia who are current or retired employees in the Australian education sector or are family members of members (i.e. shareholders) of the Bank. Teachers Mutual Bank is a division of Teachers Mutual Bank Limited ABN 30 087 650 459 AFSL/Australian Credit Licence 238981. [1] National Tertiary Education Union, NTEU Submission to the Attorney-General into the Statutory Review of Casual Employment Legislation, August 2022, D22 1652557 NTEU Submission.PDF (dewr.gov.au) 2Target Saver rate incudes 5.49%p.a. variable bonus rate and 0.01% variable base rate. Bonus rate is available if savings conditions are met. 3Before you decide on any of our products or services and for full terms and conditions of Target Saver (including all bonus interest criteria), please read both the Conditions of Use Accounts and Access, and Fees and Charges documents. You can find these online at our website or ask at any of our offices. * The Mobile App is free to download, however your mobile network provider may charge you for accessing data on your phone. We recommend that you read the App Terms of Use and consider if this service is appropriate to you prior to making a decision to use the Mobile App. We test the Mobile App to ensure compatibility with the majority of popular devices, but cannot guarantee that it will be compatible with all devices and operating systems. Learn more about Mobile App Terms of Use. If you want to feel more in control of your fluttering finances, making a budget is a valuable first step.