How to Stay on Track with a Rollercoaster Income

By Mary Hunt

January 3, 2019 5 min read

If you are among the millions of people in this country who don't really know how or when they will see another paycheck, chances are you're either unemployed or self-employed. And now that I think about it, being self-employed can be a lot like being unemployed, except for an unemployment check.

If you are a freelancer or consultant, or you work in commission sales, the arts or some other form of self-employment and you don't know when, how or how much you'll get paid from month to month, the word "rollercoaster" may bring more to mind than something in an amusement park.

Some months you nearly work yourself to death but produce absolutely no income. Then a deal closes or you have a pretty good month, and it takes nearly all of that money to pay last month's bills.

Then the miracle of miracles happens and you have a $10,000 month. Suddenly, in your mind, you're making $120,000 a year. Time to call the travel agent and book a European vacation!

Does any of this sound familiar?

Here's the problem: People who live with what I call "mystery means" typically believe they can't live according to a budget because they never know how much money they'll have to live on from one month to the next.

If you have any hope of becoming successfully self-employed, you need to change the way you think about your income. You must live according to a strict budget now, more than any other time in your life. Here's the secret:

You must assume the role of both employee and employer — and you must be able to move easily between those two roles.

First, as the employee, you need to honestly determine the lowest reasonable amount you can accept from yourself, the employer, as monthly compensation — an amount that will allow you and your family to eat and pay all the bills after taxes. Let's say, for example, you determine that amount is $4,000 a month.

You, the employer, need to take a long hard look and then ask if the business can afford to hire you, the employee, at a rate of $4,000 a month.

(If not, you may be looking at more of a hobby than a business, in which case you may need to keep your day job while getting your business financially healthy so you can hire yourself.)

Let's say that conversation goes well and you hire yourself.

You, the employer/business owner, must open a bank account. As the business generates revenue, no matter how large or small, it must be deposited into the business account (not your back pocket) from which you will pay the bills of the business, including a monthly paycheck of $4,000 — no more, no less — to you, the employee.

As an employer, you have to be stern and immovable when it comes to paying yourself. You, the employee, cannot write checks for groceries and daycare from the business account, and you certainly cannot expect a raise every month. Your salary is $4,000 (or the amount you have previously negotiated) on payday, and that's it. Consider this your steady income. The only way you'll survive is by creating a budget for how you will live within that amount and then stick to it.

If you are careful and work harder than you've ever worked in your life, your business account will begin to show a healthy balance — a nice reserve — which will be there to cover your paychecks even during months when business is very slow.

As things go well and the business is consistently bringing in more than is going out, you might consider sitting down with yourself to negotiate a raise. But weigh the pros and cons. Move back and forth between being a prudent businessperson and a needy employee, erring on the side of keeping the business financially viable.

As one who has been self-employed for many years, I can tell you there is little in life that is more fulfilling, personally satisfying and, at the same time, challenging than being both the employer and employee.

It's all a matter of buckling up, holding on tight and determining that no matter what, you will enjoy the ride!

Mary invites questions, comments and tips at [email protected], or c/o Everyday Cheapskate, 12340 Seal Beach Blvd., Suite B-416, Seal Beach, CA 90740. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of, a personal finance member website and the author of "Debt-Proof Living," released in 2014. To find out more about Mary and read her past columns, please visit the Creators Syndicate webpage at

Photo credit: at Pixabay

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