The Key to Dealing with Fluctuating Income

The financial crises of the last two decades left many Americans unsure as to how they’ll pay their bills, find a job or where that next paycheck will come from. Ironically, the feelings of financial insecurity provoked by this economic climate are routinely present in the life of many in performing arts and entertainment, as we juggle constantly fluctuating earnings and career expenditures.

The best way to combat uncertainties about money is to recognize the aspects of your financial life that are within your power, and to immediately implement tools, such as “forecasting,” that allow you to take control of those areas. Forecasting is a process that empowers you to make decisions about your spending with a goal of deciding in advance what you intend to spend daily, monthly and even yearly.

In the past, you may have attempted to keep yourself in check by employing a conventional budget. Unfortunately, budgets routinely fail, for the same reason that diets often fail. Despite our good intentions we subconsciously resist maintaining any regimen that promotes self-suffering or withholding. Ask yourself, how long did you really stick to your budget? Rather than chalking your failure up to poor self-discipline, promising yourself that you’ll “do better next time,” consider that the problem may lie with the sense of deprivation inherent in the budget mentality: “I’m not going to buy any new clothes for the next year.” “I can’t go out to eat at a restaurant (or go to the movies, or visit Starbucks) for at least the next six months.”

As a positive alternative to this lack mentality, forecasting supports you in shifting to a constructive mindset. Instead of depriving yourself, you can try planning and purposefully deciding where you want your money to go. Our last Financial Wellness blog post led you through the steps of clarifying your financial starting point, going back through six months of records to determine your average monthly expenditures and earnings. This exercise of identifying your income and spending patterns can shed light on any financial behaviors that, when kept unconscious, might impede your efforts and limit your results.

Peruse all of your expense categories and carefully examine the average amount you’ve been spending in each category. Will you continue to spend that same amount, or will you choose to spend slightly less? Instead of eliminating categories completely, you can pocket a little bit of money from a number of different places, in many cases without feeling the loss at all. Could you eat out one time each week instead of twice or carry snacks with you instead of running into the 7-Eleven before class or work? Do you have the very best plan available for your cell phone, cable and/or internet service? Can you reduce your monthly insurance fees by switching to a slightly higher deductible? Take the time to work through this exercise, even if you have a sense that you’re already being incredibly frugal. While there will certainly be categories that realistically you cannot change, virtually everyone can find at least a few areas where, with the opportunity to make a conscious decision, you can choose to spend differently.

As you forecast, enjoy the process of making your own choices, while using your money in a way that is appropriate to who you are and the things that are most important to you. When you hold a greater stake in achieving your own priorities and meeting your own goals, it encourages you to move forward in a spirit of personal competition, making the process active and exciting. Another key to successful forecasting is taking the time to hold yourself accountable throughout each month. For example, if you’ve decided to spend $400 this month on groceries, monitor your spending to make sure you don’t exceed your target. (Apps like GoodBudget can help you with this.) It may take a few rounds to find the right balance in some of your spending categories; you’ll know you’ve found it when your choices feel neither extravagant nor overly restrictive.

It takes a great deal of endurance to outlast what can feel like a financial hurricane. Forecasting is a powerful shelter from the winds of financial surprise. It will help you to weather any economic climate, ensuring that there are clear skies and sunny days ahead.

The Entertainment Community Fund offers a complete financial wellness program, free for everyone in performing arts and entertainment. We invite you to learn more and participate in our workshops, designed to support you in the implementation of a personalized financial plan of action. Learn more about our Financial Wellness Program.