How Do You Survive the Pay Check Roller Coaster?
Some of us like a good roller coaster ride. That feeling in your stomach as you look down the big hill. The realization that you're voluntarily about to do something really, really stupid. It gives you a rush unlike many others.
I don't think anyone wants that exciting, seat of your pants rush with your pay check.
Sadly, roller coaster income seems to come with the territory for many of us. How do you control your income stream when it's difficult to predict what money is going to come in next week? How do you maintain a budget when you aren't sure what the next pay day will bring?
Much like quality acting demands discipline and preparation to create a performance that appears spontaneous, maintaining your sanity with gyrating income requires you to perform a few steps so that your money can work on autopilot. With your money system in place, you'll be better able to ride the ups and downs of pay days without having that pit in your stomach that the rent is due and you're not sure where the money is going to come from.
Here are the basics:
Step #1: Set up a business bank account that's difficult to reach.
You should be able to place money INTO the account easily, but our goal is to set up an account where withdrawals aren't easy. Cut up the ATM card for this account. All of your deposits should go into this account when you're paid. Don't hold back money from this account for "just in case" or "a little extra for me." You'll need the discipline to treat your career as a business for your financial system to work.
Step #2: If you haven't already, calculate how much you need to live each month.
We discussed briefly how to do this in our last two blog posts.
Step #3: Create an automatic transfer.
Now you want to set up a transfer of funds from your new business bank account every couple weeks to your personal account. The bank can help you set this up easily, and you may be able to do this with online banking. This is your "pay check" to yourself from your business. If you can't maintain your entire budget from this income stream--or if you empty the account too quickly--find ways to cut expenses and slow the stream so that funds consistently remain in the business account to sustain you during lean months.
Initially, it's important to make your transfers from the business account to your personal spending account small enough that the business account grows. Here's why: you're going to have months when money isn't pouring in as quickly, and you're going to need this reserve to meet your basic expenses. This system works because you're able to calculate a minimum amount of money to transfer each month and stick to it. Regardless of this month's work schedule you'll be able to plan your groceries, rent, transportation, and other costs. Because you know how much you're going to be able to live on this month, that's one less roller coaster ride your stomach will endure this month. Now if we can do something about the casting call roller coaster....
That's the basic system. Easy, isn't it? Using a few steps you've successfully set up a program that allows you to:
* Focus on your craft rather than on the next check. Although money is important, you have to be able to accept projects which are fulfilling or help you gain credibility for higher-paying jobs in the future.
* Autopilot your financial picture. You'll want to review your automatic deposits and your expenses periodically, but by knowing how much you're depositing in your personal account each month, you'll avoid running to the bank to see how much you can afford for dinner.
In our next article we'll discuss how to look for a good bank account, but don't let that stop you from starting. Get moving now on your financial plan!
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