🤔 How I manage money with unpredictable income
Plus, will the changes to your taxes in 2025 help or hurt you?
Here’s what’s in today’s newsletter:
💭 My Thoughts: Tips for budgeting with unpredictable income
✅ Things To Do: MONEY CHALLENGE!
❓ Weekly Q&A: How will my taxes change in 2025?
🗞 In the News: Stay up to date on personal finance news
😎 What I’m Enjoying: Exercise gear, movie, and stand-up special
🎙 Recent podcasts: Dig into 886+ episodes in the Money Girl archive
🤣 Favorite GIF: Reply with your favorite GIF, and it might get featured!
Hi, Friend -
Managing unpredictable income can be challenging if you’re self-employed, like me, or have a commission-based job. While taking a break last week, I re-released Money Girl 812, Tips for Budgeting with Unpredictable Expenses and Income, one of 2024’s most downloaded episodes.
Here’s a summary of the show’s following tips:
Set your financial goals. No matter what you call your money system, such as a budget or spending plan, it should be based on what you want to achieve with your money. So, whether you want to retire a multi-millionaire, buy a beach house, or be debt-free by a certain age, that’s always the first place to start.
Know your budget baseline. Then, gather at least the past three months of your financial transactions. Having several months of data at your fingertips will make seeing your fixed and variable expenses easy.
Add your financial goals. If you don't have a steady income, allocating monthly amounts for money goals is even more critical. If you don't, it's easy to fritter away any extra money and never get ahead financially.
Identify your discretionary expenses. Once you've identified your baseline living expenses, including your goals and any self-employed taxes, everything else in your budget is discretionary. You can't change what you don't measure in your financial life.
Create an ultra-conservative budget. Once you thoroughly review your necessary and discretionary expenses, look at what you made last year. Identify the three months with your lowest earnings, take the average, and budget with the low end of your variable income.
Set up a holding account. This is the secret weapon for sticking to a budget when you have variable income because it smooths out your finances. Regularly pay yourself a set amount from your holding account, such as no more than your low-end average income. You allow the good months to balance the bad ones and accumulate a nice surplus over time.
🎙 Get the details by listening to the podcast or 📖 reading the transcript!
💵 MONEY CHALLENGE: Review your retirement plans for 2024!
You have until December 31 to make final contributions to workplace retirement plans and certain self-employed accounts—make the most of them ASAP. 💨
❓ On Finance Friday shows, I answer your money questions! This week’s topic comes from Karim, who says:
"I understand that tax rules change every year. I'm curious about any upcoming adjustments or new regulations that could help me save money. My question is, how will my taxes change in 2025?"
🎙 Listen to my answer in Money Girl podcast episode 886, 5 Money-Saving Tax Changes for 2025, or read the transcript. 📖
🗞 Mortgage rates dipped again for the third consecutive week, with the 30-year loan averaging 6.6% at the end of this week.
➡️ TAKEAWAY: More rate drops are likely to improve the 2025 housing market outlook, but prices won’t ease until buyers have more new and existing home inventory to shop.
🗞 Inflation increased by 0.1% in November to 2.7%, stubbornly remaining above the Fed’s 2% annual target and frustrating consumers.
➡️ TAKEAWAY: While inflation is far below the 40-year high in mid-2022, elevated housing costs continue to keep the overall inflation rate higher than the Fed would like.
🗞 Interest rates may get cut on Dec. 18 for the third consecutive time since September, following a steady drop in the inflation rate.
➡️ TAKEAWAY: While the Fed is expected to cut rates by 0.25%, future cuts are uncertain, especially with a new administration moving into the White House next month.
💪 These resistance bands make it easy to exercise at your home, office, or hotel, whether you need a light, medium, or heavy anchor to strengthen your legs, glutes, hips, or arms. They’re super light and easily fit into your suitcase pocket or gym bag.
🎬 Fly Me to the Moon is an Apple TV+ romantic historical “dramedy” starring Scarlett Johansson as Kelly Jones, a marketing specialist, and Channing Tatum as Cole Davis, a NASA launch director. It’s a fun story set in Cocoa Beach, Florida, at the Kennedy Space Center. Jones must create a fake moon landing in case Davis’ Apollo 11 mission to the moon doesn’t go as planned, and a romance blossoms.
🎥 Jamie Foxx: What Had Happened Was… is an incredibly raw, moving, and hilarious stand-up performance from the beloved, multi-award-winning actor and singer about his health challenges, physical recovery, and outlook on family and life.
🎧 886: 5 Money-Saving Tax Changes for 2025
🎧 885: 4 Ways to Give a Young Child a Wealthy Future
🎧 884: Creating a Disaster-Proof Financial Life
🎧 883: What Happens to a 401(k) When You Die?
🎧 882: 7 Ways to Cut Healthcare Costs
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