The Artful Adjunct Budgeting Method – How to Make a Budget with an Inconsistent Income
Obligatory disclaimer – I am not any type of finance expert; I am sharing a budget template that works for me.
Budgeting can be a pain in the butt. Most people don’t do it or just don’t know how to make a budget (read about it here and here). For some reason, having a budget implies that you do not have enough money. It can make you feel restricted in spending. Explaining to your friends that you don’t have enough money to do something because you haven’t budgeted for it can be embarrassing. It can be confusing to create one, especially if you get paid biweekly, or your pay otherwise varies. How do you create a budget template? What do you include in a budget worksheet? Do you just pay your bills and then use whatever is left for food, gas, and fun? And worse yet, what if you are creating a budget and you find out you don’t make enough money to cover all of your expenses? Remember the one with five steaks and an eggplant?
I was tired of feeling like I didn’t have enough money from month to month. I was tired of feeling like each time I was starting to get a little bit ahead something would come along and drag me back into debt. I was worried. I was frustrated. I was ashamed. After my full-time academic gig ended, I felt lost, confused, and scared. I felt like I had hardly any control over my life or situation. I ached for relief. I needed to know that I was not alone. So, I turned to the internet.
For the last year, one of my guilty pleasures has been watching YouTube videos and reading up on finances and debt. But I found that it didn’t always make the most sense for someone in my situation. It was geared toward people with consistent income, or maybe reasonable amounts of student loans. Some of the advice about paying off credit card debt seemed wrong. Some people would budget by the year, others by the month. The suggestions were helpful, but to work well for me, it had to be tweaked.
What I started to do was budget for the academic contract period, in my case the semester (Jan.-Apr.; May-Aug.; Sept.-Dec.). It has taken me a few months to get everything rolling smoothly, but so far, so good. My stress levels and debt are going down, and my savings and FICO scores are going up. I sleep a bit more soundly at night. I feel hopeful.
Here is how it works.
First, you will want to calculate your actual take-home pay for that academic contract period. In my case, I have two employers, and my income varies throughout the year but is the same within each of these three periods. Let’s say that I am teaching two classes that generate a $1,700 paycheck once a month from one university and another two classes at a different school that generates a total of ten $900 checks every other week for the semester. The monthly checks are easy to allocate to your budget, but the bi-weekly ones can be more challenging. How do you allocate the money if the overall amounts vary each month? I recommend multiplying the number of paychecks by the payment amount and dividing it by the number of months to get an average monthly income for consistency. Also, don’t forget other sources of income. I added child support for this example.
So here is what my numbers for income would look like so far with this example:
|Employer||Average Monthly Income for Winter Semester 2018|
|U of X||$1700.00|
For this example semester, my average monthly take-home income is $4400.00. This is a pretty good semester for an adjunct.
Next, I consider my fixed monthly expenses, such as rent, cell phone, internet, etc. and list them:
|Fixed Expenses||Monthly Costs|
|Car and Life Insurance||$154.00|
Don’t forget debts. I separate these because my goal is to pay these things off as soon as possible, and it is easier to track and focus on them when they are listed separately. If you have student loans, you will obviously want to consider the different long-term options, such as debt forgiveness, that might be available to you regarding your student loan.
|Car Payment (2.99% interest rate)||$300.00|
|Credit Card 1 (14.99% interest rate)||$100.00|
|Credit Card 2 (9.99% interest rate)||$75.00|
|Credit Card 3 (7.99% interest rate)||$75.00|
I also have expenses that vary throughout the year, such as electricity, groceries, eating out, entertainment, gas, and other miscellaneous things. To budget for categories such as electricity, I looked at the previous year’s bills for the period in question and calculated an average. For gas and groceries, I used my last few months of spending and found an average. Utilities usually provide the previous year’s billed amount with their statements.
|Variable Expenses||Average Monthly Costs|
All of my regular, monthly expenses are $3043, leaving me with $1357 to work with.
Savings and Sinking Funds:
I also consider future expenses, such as doctor bills, car registration, travel expenses, car maintenance, taxes, and birthday/holiday gifts. Not all of these can be included in the miscellaneous category (which I use for entertainment, a buffer for food and gas, and the odd little expenses that come up). I also put a small amount of money into a savings account – this savings serves two purposes: to be available if there is an extreme emergency that I do not have a sinking fund for and to develop the habit of automatically putting money aside. I am only using a few categories for simplicity, but if you are considering using this budget, you will want to think about ALL of the upcoming expenses that you anticipate having this semester, next semester, and through the end of the year. Think about how much is needed and when. When should you start saving for this expense? When will you be using the money for it?
|Savings/Sinking Funds||Average Monthly Amount|
So, in this example, I would have to put $539 aside for these expenses. I put this money into a high-yield, FDIC member online savings account that is separate from the credit union where I have my checking account. When the expense comes up, I can whip out my debit card and pay it.
What about the remainder of my money? What if there is not enough?
In this example am left with $818. I add that to my payment for my highest-interest debt, in this case, Credit Card 1. When I am out of debt, I will use that money to save and invest.
What is great about creating this budget, besides helping you regain control of your money and life, is that it can give you a pretty good wake up call. Maybe you have more than enough, but because you aren’t paying attention, you are spending your money inefficiently. Maybe you don’t have enough, and you caught it before it got way out of control.
If you don’t have enough, deciding what to do really depends on how short you are and other circumstances in your life. If you are $200 short, you can fix that pretty easily by cutting back a little over multiple areas, such as travel and eating out without making a noticeable difference. If you are $1000 short, you will need to make some significant changes. That is a discussion for another day.
Try this budget with your own numbers. Be brutally honest with yourself when you make it. After you start using it, you will likely over/under budget in specific categories. It will take a few months of making adjustments before you start staying within it. Give it a try, stick with it, and let me know how it works for you!
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