__If you’re a contract worker— and more people *are* these days— you probably have irregular hours and pay. So how do you budget?__

Developing a budget isn’t difficult, *if* you know how much money you have to spend. But what if your income keeps changing? Budgeting with a variable income may be a bit more complicated, but it’s certainly possible and more necessary than ever.

__New data shows that employers are using about [25%](https://www.ft.com/content/53329655-74b3-4820-a5f9-37ae39ad6d7d) more contract workers now than a year ago, largely due to fears of recession. That means a lot more peopleare struggling to budget with income that varies from week to week.__

The need to budget doesn’t change just because your paycheck does. Spending less than you earn is the key to every financial success. It’s the foundation that everything else is built upon and it’s nearly impossible to do without a spending plan.

This is a plan that gives each dollar a job and directs the flow of money in and out of your accounts. You’ll never be able to maximize your giving and saving without a spending plan.

And this applies to everyone, whether you’re an employee or a contract worker. It’s imperative as a Christian that you wisely manage the resources God has given you. Proverbs 27:23 reads, *“Know well the condition of your flocks, and give attention to your herds.*”

Having a spending plan means that you know, either specifically or on average, how much you have coming in and going out and where those monies are directed. You’ll have to give an account someday for how you manage money, so you need to have a plan.

__The format you choose for your spending plan is up to you. You can use pencil and paper, or you can take a digital approach and for that we highly recommend you check out the [FaithFi app](https://www.faithfi.com/manage).__

Our app will help you set up your budget using the tried and true envelope system, and it has the best financial content from a host of Christian authors like Shauntee Feldhahn, Art Rainer and Randy Alcorn.

No matter which approach you choose, begin by tracking your expenses for 30 days. Capture every expense no matter how small. Then, think about the non-recurring expenses and add them in with a monthly amount needed to have what’s necessary when that expense rolls around. These would be quarterly insurance payments, annual HomeOwners Association fees, vacation expenses and your Christmas fund.

Next, take that 30 days of actual spending, plus the non-recurring expenses and build an initial budget by category. Once that’s set up, you’ll need to bring the budget in line with your income, making sure that your spending reflects your goals and priorities. If it doesn’t, that’s where you need to start cutting back and making changes.

If you use the FaithFi app, you’ll find its envelope system particularly helpful for controlling the flow of money in your discretionary categories, which are the typical budget busters because they vary from month to month. These are things like eating out, shopping for clothes, gifts, and entertainment.

If you’re married, you’ll also have to decide who manages the budget going forward, husband or wife? We all have different gifts and talents. Sometimes the more detailed, organized person is the wife, sometimes it’s the husband. You’ve got to figure out what’s the best approach for you.

__You can have one person as the bookkeeper, but *both* spouses need to be in on the plan, and the commitment to *sticking* with it. This is why we recommend that you have a weekly “money date.”__

That’s when you come together each week to review the spending for the last seven days, make course corrections, and address the unexpected and of course, the unexpected is always going to happen.

That covers variable expenses, now what about variable *income*— which is key for most contractors. Start with what you do know. What was your average monthly income for the last six months?  Can you reasonably expect to earn the same amount in the *next* six months?

The goal is to arrive at a budget that can be covered by the average (or slightly below average) amount you expect to earn each month. In the months that you earn more, put the excess in savings to fund the lean months.

You may also want to consider depositing all of your income into savings and then transferring only a set amount each month for living expenses. Then every six months or so, reassess your average income for the period and make necessary changes to your budget. That’s how contractors— or anyone— can budget successfully on a variable income.

You can also __[listen](https://www.faithfi.com/search?q=The%20Contractor%E2%80%99s%20Budget&videos=true&articles=true&podcasts=true&posts=true&groups=true&events=true&support=true)__ to the related podcast on this topic.

FaithFi

Articles

Budgeting with a variable income may be a bit more complicated, but it’s certainly possible & more necessary than ever.

MANAGE | Oct 28, 2024

The Contractor’s Budget

By: Rob West & Jim Henry

Where Faith Meets Finance

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