When I was a kid, we had a water well at our house. The pump would run long enough to fill up the tank, then shut off. So the water pressure in the house was either all or nothing, kind of like your income.
Being self-employed is almost synonymous with wild swings in income. Compared to a steady job with a steady paycheck, self-employment feels like a roller coaster ride.
And it’s not just self-employed. It’s also all kinds of people with irregular income. Recent data reported at Small Biz Labs showed both people with low incomes and people with high incomes experiencing big swings in their income, month to month. While I don’t have the data on it, I’m sure this is especially true in rural areas where part-time employment and time between jobs can be larger challenges.
Our water pressure problem was solved with a pressure tank. Water flowed in when the pump was on, then a reserve of air pressure pushed the water out steadily as needed. What we need is a pressure tank for your income.
Rather than live through wild swings each month, pump your income into a pressure tank (a separate checking or savings account), and push out a steady amount each month.
Start scrounging up every extra dime and build up your pressure tank account. When you have one of those boom months with higher income, stuff as much as you can away in that account. Then when you hit the bust month with no income or low income, draw out a supplement to even things out.
If you’re really good, you can take your total annual income from last year, divide by 12, and use that as the baseline. Anything over the monthly average goes into the pressure tank. Anything under that, you get to supplement.
I shared this idea with my friend Marc Pitman*, and he told me more than a year later that he found it helpful. I hope you’ll find it helpful, too.
*Marc helps leaders, especially in nonprofits, lead their teams with more effectiveness and less stress. Stop by Concord Leadership Group to get to know him.
New to SmallBizSurvival.com? Take the Guided Tour. Like what you see? Get our updates.
- Best practices for rural housing - July 19, 2021
- How to be more open to new ideas #IdeaFriendly - July 3, 2021
- Market your small town as a movie filming location, attract movie and game fan tourists - June 28, 2021
- Survey of Rural Challenges 2021 results, analysis of themes from 2015 through today - June 7, 2021
- What makes a small town a micropolitan or nanopolitan? - May 22, 2021
- Improving Rural Housing: turning blighted dilapidated houses into new homes - May 7, 2021
- Are marijuana shops good or bad for small towns? - April 22, 2021
- Downtown is your town’s core: How to make your case - February 22, 2021
- Zoom Towns: attracting and supporting remote workers in rural small towns - December 10, 2020
- In an economic crisis, spend your brainpower before your dollars - November 25, 2020
I’m so glad you blogged this!