Writer: D'Lyn Ford
LAS CRUCES -- Money management can be challenging when paycheck amounts vary from month to month, said a New Mexico State University consumer education specialist. Salespeople, hourly wage earners, the self-employed and seasonal workers may get a different amount in their paycheck each payday.
Careful planning will ensure that expenses are covered even if money doesn't come in on a regular basis, said Susan Wright with NMSU's Cooperative Extension Service.
Some people anticipate times when income will be low and save to cover the short times, Others manage by keeping credit obligations low and adjusting their spending to match income, Wright said. Some who are accustomed to higher incomes rely on credit to ride out periods when income is low. This method, however, often fails and a financial crisis occurs.
"To avoid financial problems when money is limited, make a realistic plan for spending, saving and debt repayment," Wright said. The plan should be designed to cover periods of high and low income by establishing a sound spending budget.
Income from the past year or information from an employer can be used to project income for the coming year. An average monthly income can be determined from the projected annual income. This amount can then be used to develop a monthly budget.
"Divide the average monthly income among expense categories such as household bills and debt payments," Wright suggested. "This creates a limit for monthly spending and assures money goes where it is needed."
In months when more money is made than is needed to meet the budget, the extra dollars should be placed in savings to cover expenses during times when income is lower, she said. It also can be used to cover irregular expenses such as taxes, insurance premiums, vacation expenses and gifts.
"Monitor the amount spent in each category throughout every month to control spending," Wright said. Make adjustments between amounts in categories as needed.
The budget should be reviewed each month. "If a category requires more money than allocated several months in a row, and another requires less, adjust your budget to better reflect true needs," Wright advised.
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