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How to Stay on Track with a Rollercoaster Income

If you are among the millions of people in this country who don’t really know how or when they will see another paycheck, chances are you’re either unemployed or self-employed—which now that I think about it, being self-employed can be a lot like being unemployed except for an unemployment check.

A group of people sitting on a bench

It’s a rollercoaster, baby!

If you are a freelancer, a consultant, work in commission sales, the arts, or some other form of self-employment and don’t know when, how, or how much you’ll get paid from month to month, the word rollercoaster may bring more to mind than something in an amusement park.

Some months you work yourself nearly to death but produce absolutely no income. Then a deal closes or you have a pretty good month, and it takes nearly all of that money to pay last month’s bills.  

You made it … ?!

Then miracle of miracles, you have a $10,000 month and suddenly in your mind, you’re making $120,000 a year. Time to call the travel agent and book a European vacation!

Does any of this sound familiar?

Here’s the problem

People who live with what I call “mystery means,” typically believe they can’t live according to a budget because they never know how much money they’ll have to live on from one month to the next.

If you have any hope of becoming successfully self-employed, you need to change the way you think about your income. Now more than any other time in your life you must live according to a strict budget. Here’s the secret for how to do that.

You wear two hats

You must assume the role of both employee and employer—and you must be able to move easily between those two roles.

You the Employee

First, as the employee, you need to honestly determine the lowest reasonable amount you can accept from yourself the employer as monthly compensation—an amount that after taxes, will allow you and your family to eat and keep all the bills paid. Let’s say, for example, you determine the amount is $4,000 a month.

You the Employer

You the employer needs to take a long hard look and then ask if the business can afford to hire You the Employee at a rate of $4,000 a month—every month, 

If not, you may be looking at more of a hobby than a business, in which case you may need to keep your day job while getting your business financially healthy so it can hire You.

Let’s say that conversation goes well, and you hire You.

A new separate bank account

You the Employer/business owner must open a bank account. As the business generates revenue, no matter how large or small, every amount of money coming into the business must be deposited into this “business account” (not your back pocket, not your household bank account) from which you will pay the bills of the business, including a monthly paycheck of $4,000—no more, no less—to You the Employee. As an employer, you have to be stern and immovable when it comes to paying yourself.

Hands off the business account

You the Employee may not write checks for groceries and daycare from the business account and you certainly cannot expect a raise every month. Your salary is $4,000 (or the amount you have previously negotiated) on payday and that’s it. Consider this your “steady income.” The only way you’ll survive is to create a budget for how you will live within that amount and then stick to it. 

MORE: How to Budget on a Rollercoaster Income

Grow a reserve

If you are careful and work harder than you’ve ever worked in your life, your business account will begin to show a healthy balance—a nice reserve—which will be there to cover You the Employee’s paychecks even during months when business is very slow. 

Negotiate any raise

As things go well and the business is consistently bringing in more than is going out, you might consider sitting down with yourself to negotiate a raise but weigh the pros and cons. Move back and forth between being a prudent business person and a needy employee, erring on the side of keeping the business financially viable. 

The bright side

As one who has been self-employed for many years, I can tell you there is little in life that is more fulfilling, personally satisfying, and at the same time challenging than being both one’s employer and employee. 

It’s all a matter of buckling up, holding on tight and determining that no matter what, you will enjoy the ride!

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3 replies
  1. Sue in MN says:

    My husband’s income for years was uncertain – he had 2-3 “side hustles” at a time, and I had the main paycheck. Even in years when he was fully employed in one job, they were somewhat short-lived and we never knew when the next layoff would arrive. So we always budgeted based on my paycheck and supplemented with his.
    In retirement, we still operate that way – my pension & his social security form the basis of our budget, extras are thought out & negotiated, then taken from retirement savings. This does not include annual bills like taxes, gifts and insurance premiums – those are set aside from the budget in a separate account each month and withdrawn as needed.
    Yes, we are extremely blessed financially to have enough for our “golden years” but it would never have happened without the discipline of keeping to a budget for many years – even when it pinched! Even now, we keep expenses under control, but it is easier because we learned a long time ago to tell the difference between “need” and “want.” For example, I need a cell phone (my primary means of communication) but mine was stolen and the six-year-old spare was awful, so I “wanted” a new phone. We decided a factory-reconditioned version of the 2-year-old stolen phone for $300 was just fine – instead of the latest model for $800. We need internet service to function away from home, but wanted faster service in our winter tiny home – for $25/month each my brother & I got adequate seasonal service – instead of $100/month for whiz-bang fast service on an all-year contract. We have tried with mixed success to instill this in our adult children – some get it, some never will.

  2. Maria says:

    Hi Mary,
    We are now retired but were small business owners for over 30 years. This advice that you gave us many years ago, really helped keep us afloat and thrive over the years. Thank you!
    Now that we’re retired, and not really “needing” to work, we’d like to start a side hustle and can’t seem to come up with anything. A post about this topic, Mary, would be very interesting for many of your readers in our same situation. Thanks again for all that you do!

    • Mary Hunt says:

      Wonderful feedback, Maria! Happy to hear that this solution for the “mystery means” situation worked for you! And I love your suggestion for a future post on how to find a side hustle. I think that means both of us have the entrepreneurial gene! Keep your eyes open for that post coming up in the near future ❣️


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