Having an irregular income can be extremely nerve-racking and extremely annoying sometimes
I know this firsthand after working in the restaurant industry for over 16 years while paying off my
$82,000 in debt
And it's difficult because it adds another layer to whole planning of your
finances every single month and because of that you just
Wing it, and why wouldn't you because if you don't know X then how can you figure out?
Why that's a little matte top for it, so where do you start? Well you start with the irregular income?
Budget, that's a freaking mouthful. We'll call it the IIb, okay
I don't know if we'll stick with that
But what's right?
This type of budget is for people of all kinds of industries
As long as your income has the potential to fluctuate every single month so either you get paid 100%
Commission or you get a base salary plus Commission, and this method is free so jobs like servers bartenders
Realtors car sales men in car sales women any kind of software sales
Entrepreneurs or anyone who's self-employed in general we're gonna go into more detail, but at a high level
This method essentially forces you to distribute your money based on your needs
So you can kind of think of it like Maslow's hierarchy of needs that?
Pyramid and then flipping it upside down, but more on that in a minute one thing
I need you to remember when you're putting your budget together is that you're never going to be able to guess
Exactly how much your expenses are going to cost I've been doing this for years, and I still get up
But you can at least get close and when you first start out. You are definitely going to be
Pretty wrong, but don't be afraid to do it. That's the most important part
Do not let that stop you do not let that frees you from not
Setting up a budget and getting your debts paid off a good rule of thumb
If you're really not sure how much an expense is going to cost you then guess a little bit high
it doesn't hurt to guess a little bit high and give yourself a little buffer because then if you spend less than what you
Budgeted for that's some money in the bank right not for your pockets. It's gonna
Go towards your tête if you're still in debt
I'm gonna be very direct about that because if you let those all things
Hang you up then you'll never get started and that's not a good thing. I've been there
I've done that I don't want you to make my mistakes
I'm gonna stop the video right here press pause go get a piece of paper
Go get a pen because we're about to hop in my computer so that I can show you how to build your
IIb let's go thanks for coming into my computer I appreciate that so before we actually put numbers to paper
We're gonna go through and we're gonna start structuring your budget
So we're gonna categorize your expenses that you have every single month
And we're gonna use that hierarchy that I mentioned to you earlier to do this
So I've split the hierarchy up into different tiers
And as we walk through each one by the time we get to the end of it you're gonna figure out. What's your neat?
What your needs are and what your wants are?
So let's get right into it here is tier 1 grab your pen grab your paper write tier 1 and
In tier 1 you want to put things that are your basic needs, so I've got shelter food and transportation transportation. I've gotten there because
You need to get to work
You need to be able to generate some sort of income therefore you have to have some sort of transfer
transportation now these are like I said basic basic needs things to keep you alive and
Always, remember as well that once you get the initial list laid list laid out
You can always adjust it and move things around so just write your initial thoughts
Start don't find excuses not to do this ok so write those down pause the video and we'll move on to tier 2
So here is tier 2 now think of things that are still needs
But they're not the basic needs
And I've put examples here like utilities medical anything medical related debts
And if you can think of anything on your end that
Might also go into this category that I didn't list here then put it in there
These are just examples to get you thinking that's that's all I'm trying to do here
And I know that your situation is going to be different from mine or other people so just try to put your tier to
Second level basic needs if you will if that so tear to pause the video write it down do not put any numbers or just
Creating the list okay tier 3 is where it's gonna start to become a little questionable because you can decide
Where what's put in tier 3 so I?
Would prefer that you put your extra debt payments in this tier while it's not a minimum payment, right?
We've got that in tier 2 you've got that handled, but if you have some extra money
And you were trying to get rid of your debts
Then tier 3 is gonna be where you're going to put those extra payments also
And I kind of struggled with with putting these communication items in tier 3 because I think nowadays
with
How much everyone uses their phone and the internet?
I almost want to put that in as you as a utility but for now I'm gonna leave it in tier 3
this is
your budget your personal budget that you're creating if you feel it needs to be put into your 2 then put it into your 2
but try not to get too ridiculous with this because
You need to reevaluate at the very end whether ok are these things once or are they needs
Do I really need them to live off of and?
It's usually a no, but I I think that that phone and Internet can honestly go in tier 2
But I'm just gonna leave it in tier 3 for now
I wouldn't be mad at you if you put the phone and Internet in tier 2 as long as it's not too expensive
Okay
That's another thing
Be a little realistic here because this is your budget and this is how you're going to be spending your money in this particular month
And last but not least tier for all of those wants that we have um
I
Want you to write all of your wants down here because?
When it comes on to it as you have money coming in every single month, you're gonna be able to spend your money
How you want, so if you decide that you don't want to spend very much money towards extra, debt payments
then okay that's up to you, and if you want to spend it on cable or Netflix or
vacations or
Going out to eat. I don't recommend it, but it's your money. You can do what you want with it, but
Your watching this video for a reason right you want to get some sort of structure around your finances
And that's why this is here. It's here to help you so pause the video and
Write your tier four wants down and then after you do that
I want you to go ahead and look at your whole list and
Feel free to start moving things around and adjusting things and really think about what's if?
something is a want or a need if you want to move it higher if you want to move it lower because
It's gonna be up to you now that you've got your expenses listed out and prioritized
It's time to go on to the next step of the process, so we're here at my new spreadsheet that I made for you
So I covered up this side of the spreadsheet on purpose ignore this area for now and pay attention just over here
So you've got your expenses out listed out to look to the right of those
I want you to write the monthly cost of each expense and then to the right of that
I want you to put which week it is due
So you're gonna have some expenses that you need to spend money on every single week most likely for example groceries
So $400 for the month divided by 4. That's $100 a week hashtag math. Yes, I can do math so
Do that with the rest of your bills going forward what I would like you to try to do is to get the due dates?
For each of your bills to be staggered so you might have will say all of your bills
Due the first week of the month
That is not ideal because that doesn't match up with how your income is currently coming in
So try to get ahold of the companies that you owe money to or your landlord and see if you can maybe
switch
When that payment is due I know there's usually a range as to when you can pay your bills
So say you get your bill on the first of the month
sometimes they're not really due until the second or third week, so you you usually already have a little grace period but if you don't
then maybe
Contact those certain companies and see if they'll work with you to kind of push that due date out a little bit now
It's time to pause the video write down the cost of each expense and then write down the week that each
Expenses due and then when you come back
I'm gonna walk you through how you're going to work through your budget when you start having money come in now that we've got the
Three key components that we need to make this budget work the expenses the cost and the week that that cost is due
It's time to start executing the budget. I'll quickly explain the layout of this budget up here to the left
We have your weekly income so as you were making money each week you type in that number here
And then uh over here to the left we have all of our
Expenses teared out like we did before in step one and then we've got our costs
Which is another?
Input that we had already figured out and then right here the week that each of them are due which we had already figured out
As well, so we're just plugging this information in to this side, or I grayed out not highlight it
I grayed out the weeks that each of these are these
Expenses are due based on what we talked about here because you want to make sure that you're tracking properly
Throughout the month and you are paying your bills on time
Here's a quick tip a way for you to stabilize this whole
budgeting method is this if
You can try to get to a point where what you make in the current week will be used in the following weeks
Then that's ideal that way you know how much you are going to have to spend so you would want to get to the point
Where what you made in the last week of the previous month?
Would actually be spent right here in week one that way it takes a lot of the guessing out of this whole situation
But if you are not to that point then that's okay that shouldn't be a reason to not do this
Still do this
Don't stop keep going
Keep trying next what we need to do is find those expenses that we need to spend money on every single week so our
groceries and fuel
So before money even starts coming in we already know that we have to split that amount of money up throughout all four weeks
So let's go ahead whoops. Let's go ahead and put that in right now. Okay, so week one hits and we make
$1,000 that's awesome. I'll take it so how do we want to spend our money?
Well, we've already spent 150 of it on groceries and fuel because we split it up correct next
Mortgage and rent, let's do the first week so we have to spend that money there correct
So now we have to figure out. Okay. Where do we want to spend the rest of the money?
Well the gas bills. Due so is the water bill
And then also our credit card payments. Do as well. There's $150 so now we actually have
$100 left $100 of that
$1,000 so what are we going to do with it?
We've already knocked out the bills that we have to pay
So let's go ahead and just pick something right because the rest of these bills aren't due until the later weeks
So in this case, let's just throw
$100 towards our health insurance
Just to put it there. We won't actually spend it because it's not due until the end of the month
But we'll kind of put it off to the side and a side account which I'll have to talk to you guys about us those
Side accounts in the future so stay tuned for another video on that. Okay. We've got a bunch of green. That's a good thing
That's what we want to see so we're actually even for the first week of the month perfect now
We're going into week two week two will say we only make
$700 that week darn it that stinks went a little bit down
But hey we have an irregular income so that's what this budget is for it
It's okay, so how are we going to distribute that money for this second week?
Well do we have any bills due okay?
Well the car loans do and that's $200 so we've got to spend 200 of that 700 on
our car loan
We've also already spent a hundred and hunt our hundred dollars on a gross on her groceries and 50 on the fuel
perfect and then we've also got the internet due now this is Tier three and
We need to be sure that we're going to be able to cover the rest of our expenses for the month
So it's due. It's a bill that we've kind of put out there as hey
This is important
So let's go ahead and just pay that now because we need the Internet and if something happens later in the month
We've got an emergency fund which that's another topic that we'll talk about in the future
So we're going to throw 50 dollars there and that brings us to
$400 okay now. What are we gonna do with the rest of the money?
That's $300. Nothing else is due so we can put it kind of anywhere we want well
We know that health insurance is very important
We put it in Tier two
So let's go ahead and throw another hundred dollars towards that little side account that we're putting that money in
for that due date at the end of the month just to be safe because we're not sure how the rest of them once we're
Gonna go, so let's try to fill up that cat that account as soon as possible. We also just want to start
Let's just start putting some money towards that student loan minimum payment
I know it's not due until the third week, but let's just it's it's a very important payment to us, so let's just throw
$200 aside
In anticipation for that due date next week so now we're at our $700. Everything's green awesome
We're seeing green over here as well because we're covering some of these expenses
Over here over by the student loans you see if we put $200 towards it
But it's not green yet because we haven't fulfilled that full expense now we come into week three. Let's say week three
We make $900 cool. That's pretty good. I'll take it. It's not that thousand dollars that we made the first week, but that's okay we
Knew that this was gonna happen because this is our job. This is our career this side would get paid no big deal
We're not gonna bitch about it
We're just gonna do what we do and continue down the process so how are we going to distribute that $900?
We've got to hit up everything. That's due so that electric is dude
We got to pay that we've also got a hundred and fifty dollars going towards our groceries and fuel
Also, got our car insurance. Due so that's a hundred more dollars, okay?
What else is due what else is due all the student loans?
That's right, but we already put $200 in the side account cool. We have 200 more dollars to put towards their green
We've fulfilled our student loan minimum payment that is awesome, so we've got a little bit of money left
So what are we gonna do with it? Well? We've also got to pay our cell phone bill. Yes
That's in Tier three
But we're pretty confident that we're gonna be able to pay for everything else so we need to from tier two
Right if you look up here. We've just got one more bill in Tier two to fulfill. That's pretty good
we're really happy about that, so let's go ahead and just pay that cell phone bill and not worry about it and
Now we're at
$650 so what are we gonna do with the rest of that money? Well this is where we have to decide okay?
How are we gonna spend it? Let's just say you know what let's knock out our health insurance right now
That's going to be perfect and now we've got all of our bills fulfilled
Holy smokes we're doing really really good this month Amy
We've got money left over this week, and we still have next week to work - that's that's pretty cool
I'm really really excited about that now
This is the whole choose your own path thing you remember those goosebump books where you could choose your own destiny. I loved those books
so we can either choose to put things in tier-4, which I didn't even bother list in here or
We can start paying those student loans those cart that car loan that credit card payment
We can start putting extra money towards that so let's just say you know what I?
Want to throw?
150 more dollars towards my student loans oh, man we're over, but that's okay in this case because it's extra towards our loans
I'll have to change the formatting that's a me problem, so we're already getting ahead on our student loans
I'm really really excited about that plus. We have this fourth week now
This is where you can kind of fall off the rails because you know do you still have a whole nother week's?
Weeks worth of pay left to receive
It's easy to fall off the track especially when you see those dollar signs and you realize like hey
I have some some extra income to put towards whatever. I want. Maybe I should go out to eat
Maybe I should buy some clothes and this is where the winners and the losers
Are made now week four comes along, and we have a down week we make
$400 it
stinks, but you can feel comfortable because you've got all of your other tier 1 2 & 3 bills really covered your
minimum
So what are you gonna do with that $400?
This is where the choice is yours your actions right here are going to determine the outcome of your debts
How quickly you're going to get your debts paid off if you do have an irregular income
I hope this gave you the confidence to start a budget so that you can start paying off your debts or
Managing your money a little bit better
Don't look at your income as a road block look at it as an
Opportunity and don't let yourself put those roadblocks in front of yourself as to why you can't do
Something you have to start and you have to start today, and you've got to realize you're going to mess up
I've messed up in the past in my budget
And I still mess up every single month everybody does do not be afraid to start just because of that
Thank you so much for taking the time out of your busy day to check out this video
I hope you found some value make sure you hit that like button
Subscribe button and comment down below cuz I loved you more than cheese
And that's weird because I really really love cheese
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