I’m Self-Employed, and Since My Income Is Different Every Month, Budgeting Feels Impossible

Photo: Getty Images/Carlina Teteris
So you want to have a healthy relationship with your finances and prepare for retirement, but you’re not sure where to start or how to get there. With Money Talks, three people in different life stages outline their experience of working with a financial professional for the very first time. As it turns out, it’s never too early or late to chat through your goals with someone who can help.

Before meeting with a financial professional to talk through money roadblocks and goals, it's key to get clear on where you are currently and where you ideally want to be. Here, meet one of the three participants ahead of her conversation with the pros, and learn about her specific background and money intentions.

About me: I'm a 33-year-old licensed mental health counselor who lives in Connecticut. I'm single, share finances with no one, and don't support anyone else financially. I have both credit card debt and student loan debt, both of which I'd like to pay off and then start a habit of paying off my cards in full every month. The thing is, budgeting is tough because my monthly income is always different, depending on how work shapes up. And planning for the variance in my monthly income in advance feels impossible, because, well, I don't know what I don't know. I'd like to find a system that works for me so I can start saving more.

Household income range: $90,000–$170,000

What are your regular monthly expenses?

Rent, car payment, student loan payment, utilities, health insurance premium, credit card payments, business expenses, business trainings

Do you have a saving strategy, and if so, can you describe it?

I transfer a small amount of money per month to a savings account. The actual amount varies, depending on my income flow for the month in question. In addition to my savings account that I contribute to as I have funds available, I also have a small automatic transfer to a Roth IRA account. I would like to contribute more at some point, but I am focused on putting more money toward paying off debt.

What are your short-term financial goals?

Most pressingly, I'd like to pay off my credit card debt. Next, I'd like to learn how to maintain being able to pay off the two credit cards I use in full every month.

What are your long-term financial goals?

Being able to pay off my school loan debt and purchase a house is my ultimate goal. And I'd like to do this while continuing to save money toward retirement. I would also like to more consistently use my money to be helpful and useful to others—and I'd like to feel financially safe and secure in doing so.

What are the barriers in the way of you achieving your financial goals?

Most notably, my income varies from month to month, given my career as a service provider. If I have a slow month at work, paying off my credit card, paying down debt, and saving are all tough. And it's really hard to plan ahead for as well. In general, budgeting with a different monthly income makes sticking to any budget tricky.

My income varies from month to month, given my career as a service provider. If I have a slow month at work, paying off my credit card, paying down debt, and saving are all tough.

What do you consider your biggest challenges when it comes to managing your financial wellness?

Most recently, I'd say those barriers have become the combination of the rising cost of living and inflation. These factors are largely out of my hands, and I find it challenging to cut costs and reduce personal comforts even further to meet my longer-term financial goals. I also feel as though there's a ceiling on how much income I can generate considering the work I do and the populations of people with whom I prefer to work.

Have you ever worked with a financial professional?

No, I've been skeptical as to whether it would be worth it.

What is your current strategy for retirement planning? 

I have a Roth IRA, but I plan to shift this to a SEP IRA (which is preferable for business owners and self-employed people) before the end of the year. I make small monthly contributions of $50 to $100 to my IRA account. I also have a savings account, part of which I plan on using for a down payment for a home. Afterward, depending on how much is left, I may contribute a portion of my savings to my IRA as well.

How do you feel about retirement?

It's something I would like to put more thought into, as it makes me nervous right now. I want to make sure I am making wise decisions now so that I won't be stressed down the road, and I know there are some more conscientious steps I could be taking to this end. I'd love advice surrounding how I might make smart choices to maximize my retirement-planning strategy while still addressing my primary goal to pay down my credit card debt.

What emotion does talking about finances evoke for you? What emotion would you like to feel surrounding your relationship with your finances?

I feel a lot of fear, insecurity, and uncertainty. I would like to feel more comfortable and far less stressed about finances.

Describe your relationship with your finances as it currently stands as well as historically.

I would consider myself to be reserved in terms of how I spend my money; however, I do not think I have always made the wisest choices that would serve me long-term. I know how to cut back and do without certain leisure practices and material items, but I think there are things I could be doing better and consistently that would make a more meaningful impact on my general financial health.

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