Do you have a flexible income?  Meaning do you get paid commission or based on your performance?  Or are a small business owner?   How do you manage your income needs?  Money Magazine has an article with 5 tips for living on a flexible income.

First tip is to take your lowest income from the past 5 years and divide it by 12.  This assumes this is the minimum amount of salary you could be making.  Also if you work commission but have a base salary, you could budget off the base salary and count the commission or bonuses as gravy. 

Personally my DH and I are salaried employees.  We don’t get large bonuses and have a nice set of benefits.  So we know what we’re working with $x salary and that’s it.  But our neighbors are both hugely incentivized, they happily told us that about 25-50% of their annual salaries came in the form of bonuses. This makes planning difficult because they really should not expect it so they never do, but it is coming because it’s standard in their line of work. 

Second tip build a bigger cushion.  Definitely people with variable incomes need more cash on hand in case they have lean months and then a huge month.  The third tip was continue to save for retirement no matter what.  I guess when you have a variable income it’s easy to justify not saving for retirement because of tight months.  But Money suggests getting into the habit.

The fourth tip is use extra money for savings when it comes.  Take 10% for fun, but pay down debt or savings.  Finally Money suggests making sure you are adequately covered with life and disability insurance. 

Great tips and an interesting read for those with flexible incomes.