- 1). Calculate your total income each month for the previous 6 months to a year. A full year of income analysis gives you a better view of seasonal or monthly fluctuations for better budgeting.
- 2). Identify the lowest income month over your tracking period to use as the basis for your budget. This gives you a conservative budget so you are less likely to come up short.
- 3). Calculate the amount of money you need for taxes if you are an independent contractor or otherwise don't have taxes withdrawn from your paychecks. Calculate money put aside for retirement, health insurance and similar expenses.
- 4). List all individual expenses for each month. List regular bills and fluctuating incidental expenses like food, cleaning supplies, toiletries and entertainment. Divide the expenses into essential payments and adjustable expenses; adjustable expenses are expenses you might be able to cut if your income is lower than normal in a given month.
- 5). Set aside a particular amount for savings based on how much money you have left after all expenses are figured. The savings amount identified is the smallest amount you are able to put aside in months when your income is low.
- 6). Save any income in excess of your base budget in months when you make more money. By putting the extra money in savings, you build a safety net for lower income months.
- 7). Cut back in areas in the budget, such as food and going out, in months when your income is lower than normal.
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