Freelancers may have an inconsistent income, so how can they manage to consistently pay their bills on time? Spectrum News Tara Lynn Wagner highlights tips and strategies in this Money Matters Report.
Alina Adams describes herself as having an "only-in-New York" profession.
"I am a consultant helping parents get into school from pre-K to kindergarten to high school in New York City,” says Alina Adams, an NYC school admissions consultant.
She makes her money writing books, doing private consultations and hosting workshops. Her income tends to ebb and flow, following the rhythm of the school year. September through December, her date book - and checkbook - are full, but then, summer comes.
"June, July and August, I make maybe a third of what I make in the fall,” Adams says.
This is a challenge faced by freelancers in any field - finding a money management system that will help them stretch their income so that it lasts between gigs or during slow seasons.
For Adams, it's part math, part mindset. At this point, she says she has a general sense of roughly how much she will make in any given year. She then averages that estimated annual income into what she sees as her weekly salary.
"And I always operate in my mind on a budget of this week I made the lowest number,” Adams says. “Even if I made five times my lowest number, in my mind, I'm operating on a budget of my very lowest number."
Mandi Woodruff of Magnify Money says that is the right idea.
"I think that’s the safe thing to do so that when you’re earning more you have an extra cushion, and when you’re earning less you've probably got just enough to make ends meet,” Woodruff says.
It's also important to think long term. Woodruff recommends having an oversized emergency fund - enough to cover 9 to 12 months instead of the standard 3 to 6.
"And that’s your cushion money,” Woodruff says. “That’s when you have a low month where you’re not making a lot of money. It’s something that you can do so you can sleep at night to have that money on the side."
Not that Adams is a particularly sound sleeper.
"So if you ask am I nervous...I am nervous all the time," Adams says.
However, that constant fear of failure may in fact be a large part of her success when it comes to managing her inconsistent income.
"In my mind I think every booking is the last booking and every penny is going to have last me forever, so I never take any windfall for granted and I never assume any windfall will repeat,” Adams says.