This is the big one. The slayer of stress. The saviour of the variable income earner.
In short – you stop living paycheque to paycheque… and start spending this month, what you earned last month.
Sounds simple and not nearly as dramatic as what I described. Try it. It will change your life.
How? Because it solves one of the biggest problems that budgeting on a variable income presents: how do I budget for the month when I have no idea how much money I’m going to make this month (or you have some idea… but it’s not guaranteed… things happen).
If you’re living on last month’s income you know exactly how much you have to live on. If it was a good month, you can loosen the belt a little bit, but if it was a lean month… better stock up on beans and rice.
No one said the variable income life was going to be easy, but when you take the unknown out of the equation, things get a whole lot more manageable.
This one takes a while:
The tricky thing about Rule 4 is that it’s tough to implement right away.
It takes awhile to shift over to living on last months income. First you have to save up a full month of expenses, so that you can make the transition.
It took me around 5 months to save up so that I could make the switch. But it’s so worth it.
Don’t stress if you can’t get there right away, just SAVE SLOWLY, and you’ll be living the ‘Rule 4’ life before you know it.
How You’re Gonna feel living the ‘Rule 4’ life:
Better.
When I finally got on the ‘living off last months income’ cycle, it was the first time in my life I felt like I wasn’t constantly playing catch up with my money.
And now, gone are the days of trying to guess about how much income I will (probably) make this month. I pay my bills on the first of the month (without timing them to my income), my budget functions much better because I know what amount I’m working with at the start of the month…. and I sleep better.
LEARN MORE ABOUT YNAB: THE BUDGET HERO THAT EVERY ARTIST DESERVES
