Problems with saving and spending due to an irregular income

[Mayla]

These are two different problems. Solve the first and then you can solve the second.

I would suggest that you go through the previous 18-24 months and calculate the average business income per month. Then, during months where you get more than the average, put the excess in a separate account; during months when you get less than expected, take some out of the "excess" account to make up the difference.

From there you can create a personal budget where you decide how much to pamper yourself and how much to put away for a "rainy day" (what is typically called an Emergency Fund), and for other items that you want in your future.

Since you run a small business, I recommend a rather large EF; build it up to 12 months of personal expenses.

Good description, I fully agree with you!

[clatoden99]

If you are going to save, take a predetermined amount that you want to save from your paycheck before anything else.

Most people make this mistake (I used to too), that they will get their paycheck, spend money on utilities, rent, and other expenses, etc. and then whatever is left, they would then allocate a portion of it towards savings. This is the wrong approach.

Paycheck - Expenses = Savings

The correct approach is to take what you want to Save out first from your paycheck.

Paycheck - Savings = Amount left to Spend on Rent/Utilities, etc.

If you frequent bars and clubs to drink, you're spending money on diluted and very profitable drinks for the establishment, and they are extremely expensive on a per ounce basis.

If you have to drink, tank up at the house, take a cab to where ever you want to go and have one or two drinks there. You'll save a bunch.

[Sagalamora]

You need to track and budget your expenses. I suppose you're a computer literate (otherwise you wouldn't be here) and you could start by a simple excel worksheet, but because you're running a small business maybe it is worthwhile for you to look for a more sophisticated piece of software.

[cornfieldj]

Why don't you keep track of what you spend for a few weeks - just a simple paper-and-pen approach?

Look for patterns. Are you spending a lot on meals out? On wine? Some shopping (though you say you don't shop too much)?

It sounds like you don't really know where the money is going. So find out. Once you see where it goes, you can decide where to make cuts, or what is worth it - and what is not worth it.