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The Best Way to Budget Your Second Income

September 22, 2018 | By Daniel Dewitt

These days, it’s quite normal to have a second income. Whether you want to blame it on the economy’s underpaid workforce, higher cost of living, or a combination of both, an increasing number of households are working harder to simply pay for their bills. In fact, 1 in 5 Americans have a second income, according to Bankrate.com, and more than a third bring in over $500 a month doing so.

Of course, along with a second job, it’s important to have a good budget strategy in place. Consumer.gov, defines a budget as "a plan you write down to decide how you will spend your money each month." Anyone can create this kind of plan, and doing so has its rewards! It can help you:

  • Become more focused on your money goals
  • Spot areas where you can improve and (hopefully!) do it
  • Spend more on the things that matter, and less on the things that don’t
  • Stop incurring fees or over-drafting your bank account
  • Have more to put towards what does matter to you

How to Budget Your Income

While it can admittedly be difficult to budget an irregular income, there are plenty of easy strategies out there for you.

Step One – Prioritize: It may take a little bit of time to figure out your financial priorities at first, but it’ll pay off huge. Plus, you probably won’t have to spend as much time or effort going forward. Instead of focusing on your irregular income, focus instead on your revolving bills and expenses. For instance, if you know that you owe $300 a month on a car payment, you know how much money to set aside each week or each paycheck. You’ll also need to figure out the average amount of money it takes to buy groceries and put gas in the car. By figuring out items like these, you can once more better determine how much money to take out of each paycheck.

Once you’ve done this, you’ll tally up your monthly expenses and prioritize them according to what’s most important. (This should include basics like food, clothing, transportation, and shelter.)

To keep yourself organized, make a list of all your monthly expenses in order of importance. That will help ensure that you pay them on time and that you don’t forget about anything. Even if you think you can’t afford to pay for certain bills each month, you’ll still have to pay incurred fees from missing a payment. Would you rather pay additional fees, or just pay a little bit to keep those fees away?

Step Two – Determine Your Minimum Income: After you’ve prioritized your bills, you should next figure out the minimum of what you earn. Even if no two paychecks are the same, you can still come up with a baseline. Once you see what the lowest-earning month was, you can use that to compare to the expenses you tallied up.

The point is to budget conservatively for the worst-case scenarios. A budget will also help you identify what areas you can cut down on, which is of course a hugely important aspect of good budgeting. Basing your budget off the lowest-paying month will help you live within your means, and whenever you earn more, you can cheerfully pay for more items/bills or save up.

Step Three – Create Two Budgets: What’s better than one budget? Two budgets! If you go the extra mile and create two budgets, you can create one for the higher-earning times and one for the leaner paychecks. Why do this? Not only can you better visualize what better times would look like, but you can have a plan in place for when your monthly income performs better than your baseline budget.

Another Way to Improve Your Financial Situation

Creating and living by a budget is an important part of a healthy lifestyle. However, when you find yourself in a financial emergency and need fast cash now, there are other options. When hard times hit, you should consider looking into auto title loans.

Interested? To get approved, here’s what you need:

  • Proof of income
  • Your vehicle for inspection
  • Lien-free title
  • State-issued photo I.D.

Just go online and do an Internet search for auto title loans, then fill out the online form with your basic personal information. A store associate will follow up with you on the phone to explain how the approval process works. Next, you’ll take the above required items with you to a local store, where you will fill out the paperwork while a manager does a short inspection (in 30-minute or less).

Make the Right Choice for You

Auto title loans are a wonderful tool in times of emergency when you have no other viable options left. Have to pay off some overdue expenses? Too many bills coming due at once? Or maybe you just got some unexpected expenses. Getting an auto title loan could help you out immensely. If you do get one, just make sure you’re also putting other good habits in place, like creating and living by a well-planned budget.