As a freelancer, my income is variable. Many business owners also see the same thing with their own cash flow. When you run a business, you’re never sure exactly how much money you’re going to have coming in.

I like to have strategies in place to help me manage my cash flow in a way that doesn’t disrupt my lifestyle. Here are 3 strategies I use for managing cash flow with my variable income:

1.  Establish a Baseline for My Expenses

The first thing I do when managing cash flow is establish a baseline for my expenses. I know how much I require for the necessities of life, including my rent payment and groceries.

With this baseline established, I know the bare minimum I need to make each month. Anything that I make over that can be set aside in an emergency fund and used for non-essentials. In fact, much of the time the “extra” money I make each month is used for unnecessary items that I enjoy (after I’ve contributed to retirement and other investment accounts).

Having a baseline gives me something to work for to ensure that my son and I are taken care of, and a way to set aside extra money for the leaner months.

2. Use a “Minimum” Earnings Amount Each Day

Along with my baseline, I figured how much I would need to earn each day in order to “keep the lights on.” Most days, I make more money than that. Managing cash flow is a little easier when you know the minimum you need to keep things moving relatively smoothly.

The nice thing about the minimum earnings amount each day is that when I meet that amount, I don’t get stressed when something comes up and my plans change. It doesn’t affect my cash flow in a major way if I have to take “time off” in the afternoon. And if I can keep working to earn more, it’s extra money that can go in the emergency fund to help me ease the cash flow situation later, if need be.

3. Bridge the Gap with a Personal Loan

Finally, I do use loans when managing cash flow. Most of the time I don’t need a loan, but I find a personal loan can be helpful. I have a personal line of credit I can draw on. T

The reality of running a business is that sometimes you don’t receive payment in a timely manner. You might have done the work to account for an adequate income, but clients can be slow in paying. You could easily end up with a payment not coming in until after the rent is due or the groceries need to be bought.

My low-interest line of credit is one way I bridge the gaps when managing cash flow is difficult due to slow payments and unexpected setbacks. Most of the time, I can pay off the amount before interest accrues, so it’s a good way to keep from stressing all the time. I have peace of mind knowing it’s there, and accessible, and I’m not late on my payments.

Think about your own situation, and what might work for you. Then come up with your own strategies for managing cash flow on a variable income.


I'm Miranda and I'm a freelance financial journalist and money expert. My specialties are investing, small business/entrepreneurship and personal finance. The journey to business success and financial freedom is best undertaken with fellow travelers.

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