How do you budget for/with seasonal work?

[ml2620]

My husband owns his own business and it's mostly seasonal - he makes most of his money in the summer and almost nothing in January, February. Over the last couple of years we've lived well in the summer, and struggled through Jan/Feb.

I really hope the economy picks up and he makes some good money this summer, but how do you manage and budget for someone who's income fluctuates alot?

Also, how do you plan for those months when you know their is going to be a big expense - like the insurance bill, car registrations, etc.?

I know expert FVers, these seem like basic questions - but I thought you might have some ideas I hadn't thought of yet.

Still learning to budget....

[miss_thrifty]

I know here in PEI, Canada. that the first year ur on your feet pogey helps pou and pays Unemployment Insurance. After that some ways are : if its seasonal here u dont have to pay any workers holiday pay unless its equivalent to so many weeks.
How many years has he had his buisness? If its new to u both- there should be info to help small buisness owners out there through unemploment oand them telling you how u can claim so much for the first year towarda taxes for writes off's.
And when its your own buisness u always pay yourself first. Take so much off every check or job when paid in full away and figure out how much u need to pay those bills the months u dont work so u can live withoput being in the hole majorily.
ex:add all your income togeher for each month or week.
__if u rent or moragage for those months including food allowance, ultiltys,.
Its never easy for the first couple of years when u get started. My BIL has his own construction buisness and looks in too every deatil and got as much info when he started his buisness 2 years ago. My hubby (his brother) works for him. Look into your goverment site and find out youir rights ands what u can claim and if there any helpout there.
I hope this helps some.

[justpeachy92]

When my husband was self employed in the construction business, to get through the winter months I always made sure I set aside money during the busier summer months to cover the winter bills. I also made sure 90% of the christmas shopping was done in the summer. After he was self-employed for a couple of years we had a better idea of what the yearly income would be. Knowing from past years what was normally made in Jan. and what was typically made in July. This made it much easier to figure out how much of the higher summer income we needed to set aside for the winter months to cover bills and other needs, while allowing us to determine when there was extra money for any type of a splurge.

[elphie]

I take my monthly bills that must be paid by check, multiply by 12 and then divide by the number of months we will have steady income. During the steady months I deposit that amount into our checking account that is used exclusively to pay bill. For example if the bills you must pay by check total 1500 then you need $18k in your checking account for the year; if work is steady for nine months then deposit $2k per month.

I keep out the cash I have budgeted for groceries, gas, and misc. and the rest goes into saving. To determine a reasonable amount for cash budget multiply your income by the number of months you can rely on that income and divide by 12. For example if you know that you will clear $3k per month for nine months then you have a reliable income of $27k, putting $18k of that in savings means you have an additonal $9k.

Take your yearly expenses such as insurance, taxes, Christmas, etc and subtract from that $9000. Say that totals $2500, divide by 9 (months of reliable income) which means you need to put $280 per month of reliable income in savings. This leaves you with $6500 during those nine months; then you have roughly $540 to budget for gas, groceries, and misc per month for a 12 month period. Take out $540 in cash and put the additional $180 in savings during that 9 month period. You should not be putting enough into savings during your nine months of reliable work to cover yearly expenses (insurance, etc) groceries, gas, and misc. and enough in your checking to cover bills. If you have extra income during the unreliable months use it for paying down debt, growing savings, or extras like vacations, depending on where you are in your goals.

That was long and seems complicated but really it starts with one simple formula:

Monthly income times months it can be counted on divided by 12= the $ you have available for monthly budget

[old_lady_in_the_shoe]

We work for ourself too and we also have no income for most of jan, feb and sometimes march depending on the weather. What I like to do is "plan ahead" and when we have the money during the other months, I pay up some of my bills. I do this with the morgage, insurance, and several other smaller bills. I have my electric on levelized billing, so I know exactly what the bill will be for the year and keep it paid up too. I always expect the worse and plan it that way. Writing everything down is a great way to actually see what you need to "get paid up on"...
Get a small calendar and write everything out on each month, then start allocating the bills for the "no income months" for other more productive months. Plan it all out so nothing is left behind. Before the bad months happen, you will be all ahead.

You can also do this with your groceries too, plan ahead, shop the sales and stockpile extras in for the harder times.

We also always purchase our propane during those summer months when the income is flowing... I look at what we used last year and average it and make the minimum purchase each month till out tank is full, then prepay for the "estimated amount I need" for winter.

Don't forget to add in the birthdays, holiday gifts, and small extras too. Purchase them early and have them waiting for when you need them insted of waiting for the slow months and feeling like you have to leave a special occasion out.

we have been doing this for a long time now and it has taken us many years to figure out what works well for us. We have tried just saving enough money for the "expected bills" but it alwasy seemed to "get used" before those slow months, so we pay everything early now and there is a lot less of the "well we can save this later, or the we will not have to worry about this now" stuff.

Also I have noticed that paying things up early often saved us money in the long run...paying things quartly sometimes means extra discounts, paying yearly on things like insurance and such there are not extra fees and can save a lot...also there are less chances of those bills being late and you being charged late fees or more interest... It is a win win for us. Hope it works for you too. Good luck.

[Thevail]

Listen to ELPHIE!!!! Seriously!

My DH is in construction and there's a slow period during the winter months because a lot of jobs are dependant on the weather.

If there are any bills that you can get on the "payment plan" or whatever they call it where you are, so that each month summer and winter bills like the gas, electric, water etc. are exactly the same it's a great way to go. This lets you easily pay ahead the right amount for those slack months, or at least have it in savings.

Stock up on some food basics, but don't do it too early in the season. For example, say your last month of "good" earnings is November..then buy the 20 pound box of spaghetti and 10 cans of spaghetti sauce then, you won't have to buy it again until after the "good" money starts rolling in again. Same thing with shampoo, deoderant, razors, soap, toilet paper, dish sponges etc. Stocking up on things (preferably when they're on sale) that won't go bad is a great way to cut that entire category out of the budget during those lean times.

Oh, and figure out something to do for fun cheaply, because having a lot of time to have fun, and no money to have fun with can be a real source of frustration. We have a netflix subscription which we just pay yearly during the summer. (it's totally cheap at $108/year)

Something else that we do is stockpile "project supplies" during the steady work months, for time intensive projects that we tend to do during the "time off". Last year DH was off work for 3 weeks straight, and we got the bathroom remodeled. because we'd already bought all the stuff we needed, flooring, pedestal sink, braided water hose, etc. etc.
We started doing this when we realized that we never seemed to have both the time and the money to do anything at the same time. Now we get the supplies while we have the money, and wait for fortune to give us the time to do our projects. This is also great if your DH is like mine and gets "antsy" after he's been off work for more than two weeks. He feels that he's accomplishing something important so he doesn't feel so bad about not "working".

Hope this helps!

[elphie]

great ideas for stockpiling and planning for some fun when you have the time thevail! We homeschool so our kids can vacation whenever, we like to plan our vacations when dh will be off during the winter. We pay for it in the summer and then he doesn't actually miss any work. Plus we can get great rates because we are going in the off season.

[mommy4ever]

Look over the last few years income, see what the lowest average has been. Take that amount and divide by 12 months. Each month use ONLY that much from the good months, or less than that and save the rest, This will bank the rest. This will fill in on the slower months.

Do the stockpile too, that's a great way! Watch for the loss leaders. I got 24 packs of TP for 2.99... I stocked up. Got 38 load detergent for 2/$5 again, got a years supply while dh is still working. We will have 200 lbs of beef in the freezer shortly. We have a years supply of mac n cheese too. As things go on great deals, then I save. Watching for shampoo and conditioner sales now, then onto the next item.

I have about 4 months of sanitary supplies for myself, although I most use re-usables, and starting on some for dd12, she hasn't started yet, but it's inevitable.

If dh gets laid off, this will save us a TON of money in tight times. It doesn't feel like much now when times are pretty good, but if we were down to my income only.... it would hurt, and the relief of stocked items would be tremendous!

[savvy_sniper]

I sell online and have great months, good months, and bad months. I started stockpiling non-perishables, freezable food, and stashing some money away in the great and good months for the bad months. Also paying off credit cards and not using them unless I can pay in full when they come due or in 90 days has been very helpful.

I also save up to pay CASH for as much inventory as possible. In the beginning I was lucky if I could a month's worth of inventory. NOW I buy twice a year (4-8 palletloads). I always put back money for money inventory. You can use the same concept in every day life.

Also remember you WON'T be able to do it all at once. Baby steps are good and give you a sense of accomplishment on a regular basis. It will take time. BUT making some sacrifices will pay off BIG time down the road.

Good Luck!

[rowdy35]

I would try and start saving some money to build up an emergency fund if you don't have one. This should be about 6-9 months of monthly expenses. It's ok if you don't have a lot of money at first but start saving something, even if it's $5.00 a week.

find ways to increase your income by taking on another job or doing some type of service in your slow months. You can even babysit or do elder care if you have to, whatever will help you to make extra money.

Yes, to the stockpiling like previous posters have said.

Yes to the balanced billing - utilities like previous posters have said.

In the months that he is making money, make a big batch of homemade laundry detergent to get you through the slower months.

Learn to cook from scratch if you are not doing this already (it saves a ton of money)

Just keep learning frugal living & the obvious is to save money and spend less than you make

[Nana2two]

For us the best times are between may through Dec. Right now we are down about $1500 a month. August is our best time. The last 4 years in august we avereged around $4800 to $6000.