Saving for Retirement on an Inconsistent Income

Having an inconsistent income can be challenging.  Certain times of the year, business is great and money is plentiful, other times money can get really tight.  Fluctuating income can make traditional retirement saving seem impossible.  However, you can still build your retirement savings!

Follow these tips to build your retirement savings, even with an inconsistent income:

  • Start small.  It might seem like a waste of time to save small amounts of money, but the most important thing is to get into a habit of saving. Make a budget based on the low point of your income.  How much could you save then?  Even if it’s only $10 per month, start there.
  • Create a new account.  If you’ve ever tried to “save” money while leaving it in your regular checking account, you’ve probably realized this doesn’t work very well.  Make a new account for your retirement savings.  Set up an automatic monthly transfer for the small amount you decided on in step 1. This will allow your savings to grow consistently without any additional effort from you.
  • Save more when you earn more.  If you’re just getting out of a low-income season, it can be tempting to spend all of your income.  Instead, add a little more to your savings account.  Many experts recommend saving 10 percent of your income.  Could you do this during your high season at work?  However much you choose to save, make sure that it’s more than you would save during the low season.
  • Get rid of your debt.  It’s common for people with inconsistent income to use credit cards to survive during the low season.  Make sure you pay off your debts when you have a higher income.  If you have accumulated more debt than you can repay even with your higher income, give our office a call.  We’d love to help you make a plan to get rid of your debt for good.
  • Create an emergency savings account. Break your debt cycle by saving money so you don’t have to turn to credit cards during your low season.  Create another account for your emergency savings.  How much debt did you have last low season?  Use that amount as your goal for your emergency savings account during your next high season.  This will actually allow you to save even more money during your next high season, because you’ll avoid all the interest your credit card would have accumulated.
  • Don’t get discouraged. Maybe you have a really bad low season and you aren’t able to save anything.  That’s okay!  Start again when you can.  Persistently trying will ensure that your retirement savings will grow. 

These tips will help you to build your retirement savings, even if you have an inconsistent income.  Get started today!

The sooner you start your retirement savings, the more you’ll have to enjoy when that retirement finally arrives.


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