Mastering Money Management with Irregular Income

Hey there, Mama! If there's one thing we love talking about, it's money. As creative business owners, we know that the cash flow isn't always consistent, unlike a traditional job that pays weekly or monthly. We ride the waves of ebbs and flows, ensuring we don't end up skint after rolling around in the last client's deposit like over-enthusiastic cash enthusiasts. So, grab a cuppa and read on to discover six fantastic ways to budget with irregular income!

Balancing Finances: A Juggling Act

Running your own business is empowering, but let's be real—it can also be a tremendous source of stress. You're not only managing your personal finances but also integrating them with your business's financial aspects. Trust me, we’ve been there, and completely understand the struggles.

As we’ve connected with other entrepreneurs, we’ve discovered that uneven cash flow consistently ranks among their top financial pain points. But fear not, my friends! We’ve learned a thing or two about navigating the roller coaster ride of managing personal and business finances.

Get Accounts Receivable-Savvy:

One common cause of low cash flow is clients not paying on time or simply ignoring your invoices. Been there, done that. Here's how to turn things around:

• Conduct an accounts receivable audit: Utilise your accounting software (if you have one) to gain insights. Identify clients who consistently pay on time, those who don't, and determine your average invoice-to-payment time.
• Charge a deposit: It may seem obvious, but if you haven't already, start requesting at least a 50% upfront deposit.
• Change invoice terms to NET 15: Instead of giving clients 30 days to pay, switch to a shorter time frame. Once you've delivered your service, they should pay promptly. Unless you're dealing with substantial invoices, it shouldn't be a challenge for businesses to settle their bills in a timely fashion.
• Implement a late fee policy: Consider charging a late fee to encourage clients to meet their payment obligations.
• Offer early payment incentives: To further motivate prompt payment, provide discounts for upfront payments.

Remember, you're offering valuable products or services along with excellent customer service. You have a lot to offer, so don't undervalue yourself.

Organise Your Personal Finances:

Take a brief detour from your business finances and focus on your personal financial matters. When you run your own business, these two areas go hand in hand. That's why it's essential to be as organised with your personal finances as you aim to be with your business books.

Getting your personal and business finances organised can be a game-changer. Maintain well-organised paycheck and bill pay accounts, establish a tax savings account, and build an emergency fund covering 6-9 months of living expenses. In this digital age, managing your accounts, transfers, and bill payments can be done seamlessly from your laptop or phone.

Understand the Causes of Uneven Cash Flow:

Identify the root causes behind your uneven cash flow. Is it because you're not actively marketing during your busy season? Are your business expenses not evenly distributed? Or perhaps you're not charging your clients what you're truly worth. Once you pinpoint the underlying issues, finding solutions becomes much easier.

If your business experiences a seasonal slump, brainstorm ways to boost your income during those periods.

Give Yourself a Wage:

Now, brace yourself for the less exciting part—cutting back. Trust me, the nail-biting drama of slow months is only matched by the euphoria of spending like royalty during the profitable ones. To tackle uneven cash flow head-on, start by giving yourself a consistent paycheck based on your average monthly income.

Calculate the average by dividing your earnings from the previous tax year by twelve. If you prefer getting paid weekly, divide the amount by two and set up automatic debits from your business account. Voila! You have a paycheck.

Having a fixed paycheck makes it easier to budget for personal expenses, save for taxes, and allocate money toward financial goals like retirement or vacations. Additionally, it allows you to save during the high-earning months to weather the lower-income periods.

Expand Your Services or Product Offerings:

Diversifying your income streams is a wise move for any business owner. Not only does it increase your overall earnings, but it also helps balance out the revenue flow, as different products or services may perform better during various seasons.

Consider adding the following to your existing offerings:

• Seasonal special packages to drive more business
• Consulting services related to your industry
• Coaching or mentoring sessions for aspiring entrepreneurs
• Digital products or online courses

The possibilities are endless, and having these additional revenue streams provides a safety net during slower months.

Track Your Money:

Staying motivated and in control of your finances requires tracking them regularly. By monitoring your budget, debt repayment, and monthly expenses in one place, you gain a clear understanding of your net worth and the financial assets at your disposal.

Ladies, I hope these tips have given you a solid foundation for mastering money management with irregular income. Remember, you're not alone in this journey. We're a vibrant community of mum entrepreneurs supporting one another, overcoming imposter syndrome, and embracing the unique challenges that come with building businesses while raising our children. So, let's rock this entrepreneurial ride together!

Stay tuned for more engaging content, useful insights, and occasional hilarity right here on our blog. Until next time, keep shining bright, juggling like a pro, and showing the world what mums can achieve!