I've got a load of questions in my mailbox from readers, and the best way I've found to get the answers out there is through this column. From my experience, I know that for every person who asks a question, there are more than a few others out there wondering the same thing.
Amy in Louisiana asks: How do you budget if you are self-employed? We may have an influx of cash one month and then very little the next. I don't know how much to keep in our checking account, just in case we don't make any money the next month. I don't want to stash too much in a low-interest checking account, but I may need access to it quickly.
You're right, Amy, it is difficult to budget if you don't know exactly how much is coming in each month. But it's not impossible. First of all, just because you need accessible cash doesn't mean it has to sit in a low- or no-interest checking account. You can find savings accounts these days with low deposit limits and interest rates in the 3 percent range, and you'll have easy access to your money if you need it in a pinch.
Aside from that, in terms of balancing the months that net bigger paychecks with those that don't, it's all a matter of planning. Average out what is coming in over a six-month period, so you know what you earn on a monthly basis, and build a budget that is based on that. Then you can filter the amount of money you need to meet your expenses each month from savings to checking -- in other words, you'll be giving yourself a paycheck. The rest stays socked away for the future. That way, when you have a dry month, you'll still see the same amount in income and you'll have some extra cash to fill in the gaps if absolutely necessary. It will be an emergency fund of sorts and over time you'll be able to build it into a nice cushion of about six months' worth of expenses.
Once you have that, you can start saving in other ways, including for your retirement, if you're not already doing so.
