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Mission Possible: Budgeting With A Yo-Yo Income

Founded in 1951, the National Foundation for Credit Counseling is the largest serving nonprofit financial counseling organization. Find various topics in this blog, including personal finance, credit counseling, housing, budgeting and student loan help. Click here to speak with an NFCC-certified Consumer Credit Counselor.

MarkFoster_CCOABy Mark Foster

In our budgeting classes with adults, one question often pops up – “How do I budget with fluctuating paychecks?” If your paycheck amount yo-yo’s instead of staying the same each period, it certainly is more challenging to create a budget and make it work, but it isn’t Mission Impossible.

Look at what your minimum paycheck amount tends to be and budget using that. Too many people do the reverse – create a budget using their maximum pay including, for example, overtime hours which causes problems as soon as overtime hours are reduced or cut out completely.

If you use your minimum paycheck as your budget baseline and make it work, everything else is a plus. When you get a bigger paycheck, you can put more into savings and pay ahead on some bills, which will give you breathing room when those smaller paychecks arrive.

Mark Foster is Director of Education with Credit Counseling of Arkansas (CCOA). CCOA is a member of the National Foundation for Credit Counseling. To schedule an appointment with a Certified Consumer Credit Counselor contact CCOA at 800.889.4916, or visit CCOA online atwww.CCOAcares.com.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

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