How To Budget When You Have Seasonal Income

Rewarding careers don’t always come with a steady paycheck. For people who work in agriculture, construction, tax preparation, entertainment, landscaping or other types of freelance and seasonal businesses, income may vary wildly depending on the time of year. This uneven cash flow makes budgeting especially challenging, but it’s by no means impossible.

Here’s how to budget for long-term financial stability when your income changes with the seasons.

Determine your average monthly income
With most traditional budget plans, you start by determining your monthly income. But how can you complete this first step if your income keeps changing? The most effective strategy is to use your average monthly income. To calculate this, add up your post-tax income for the past three or more years and divide that sum by the total number of months. If economic conditions have — or are projected to — hit your industry or business hard, you may want to deduct 15% to 20% from this number to create a safety cushion.

Calculate your average monthly expenses
When work is seasonal, expenses often fluctuate, too. During busy times, you may have to spend more on gasoline, utilities, equipment maintenance and office supplies. If you spend more during your busy season, determine your average monthly costs by adding up your personal and work-related expenses for at least one year and dividing that figure by the total number of months.

Fine-tune your budget
Subtract your average monthly expenses from your average monthly income to get your baseline budget figure. If you find you’re cutting things close or dipping into the red, you’ll need to make some adjustments. Consider cutting unnecessary expenses or picking up extra income by expanding your existing business’s volume, taking temp work during slow times or offering complementary services that peak during your off-season.

Become a saver
Having a savings plan is an especially important safety net when income is irregular. When planning your budget, be sure to include a line for saving each month. It’s best if you can put away 10% or more of your income, but even small amounts deposited consistently add up significantly over time with compound interest. Aim to save at least three to six months’ worth of expenses to ensure you can live comfortably during lean times or emergencies.

Additional survival tips
To help even out cash flow and make the most of seasonal income:

  • Make it easier for customers to pay you quickly by improving your invoicing procedure, offering options such as PayPal or Square to accept credit card payments, or setting up direct deposits to your account with customers.
  • Negotiate with vendors and suppliers for discounts or extended payment terms.
  • Take advantage of financial and budgeting software such as QuickBooks.
  • Consider offering discounts and promotions during slow times to boost business.
  • Track your cash flow regularly and adjust your budget as necessary.
  • Even with your budget plan in place, keep spending to a minimum during slow seasons.
  • Stick to your budget during your busy season to avoid spending the cash you’ll need during the down times.

Seasonal income doesn’t have to mean financial feast or famine. With proper budgeting, you’ll be able to live well no matter what the season.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

Avoid Christmas Debt This Year

Christmas and BillsLet’s talk Christmas. We know it’s only August but it’s time.

Christmas is now less than five months away. That means in just a few months we will be celebrating this joyous season. What comes to mind? Family traditions, delicious food, stockings filled with candy and buying gifts? The song tells us it is the most wonderful time of the year but that isn’t the case for everyone.

Unfortunately, Christmas also is the most expensive, most stressful and most debt filled time of the year for millions of Americans. As Santa’s Wish List grows every year, so does the amount of debt Americans owe every January. If you typically are still paying for Christmas when Groundhog Day rolls around, now is the time to think about how to avoid debt and the interest that comes with it, beginning this year.

There are several ways you can tackle this problem. The first is to shop year round. If you need generic gifts for co-workers or if you already know what you are giving someone, watching sales and clearance racks is a great way to pick up nice gifts while saving a few dollars. If you buy just one or two gifts a month, when December rolls around you’ll be ahead of the game. Start with after-Christmas sales, to save a bundle for next year.

Another way to go is to begin saving a little bit each month. Start by adding up all your anticipated holiday expenses: gifts, cards, stamps, wrapping paper, bows, food, travel costs and anything else that is an added expense during the holiday season. There are five months until Christmas. Is it possible to save a fifth of the total each month?

If the answer is yes, that’s terrific! Start squirreling away the money today!

If the answer is no, think about how much you can save. Are there expenses you can trim to get you to your goal? Maybe you have something to sell. Maybe you can cut back on the holidays some and lower your savings expectations.

Even if you can save just a small amount of your goal before the holidays, it will give you a leg up when shopping season arrives.

Speaking of savings for the holidays, in October we will begin enrolling folks for the 2016 Christmas Club. You decide how much you would like to save each month and we will automatically take your payments from your checking or savings account. In October 2016, you’ll receive a check from us for the full amount of your Christmas Club savings. There is a $20 fee for an account that is closed early. See an account representative for details.

Imagine starting the year without Christmas debt. It can be done if you get organized and begin in advance!

The Fifties: Playing Catch-Up

We are nearing the end of Retirement Week by talking about what you should be doing to prepare for retirement when you are in the Fifties age group. Thanks to NerdWallet for providing us such great advice for you today! Check out other decades from earlier this week – Twenties, Thirties and Forties.

There’s one truism about retirement that has stood the test of time: It’s never too late, or too early, to start saving. Whether fresh out of school or winding down in a career, there are things you can do to successfully prepare your nest egg, as well as places where it’s easy to stumble. Financial institutions such as Vinton County National Bank can help you set up a retirement account and personalized plan. But it’s up to you to do the heavy lifting throughout the decades.

Is retirement in your future?

By Cait Klein, NerdWallet

As you straddle the equator of youth and older age, if you haven’t been funding a retirement account, it’s time to play some serious catch-up. Individuals over the age of 50 can make catch up contributions to a Roth IRA before the end of the year of up to $1,000 in 2015. With a 401(k) and other retirement accounts, you can make additional contributions up to $6,000.

The biggest mistake people make as they round the corner toward retirement is getting fixated on a certain image of what life ought to look like. If you envisioned traveling the world or parking on a beach, you may be sorely disappointed if your savings fall short. Remember the adage, you can’t take it with you. Consider downgrading your lifestyle now — moving to a smaller house, selling off additional cars or assets and limiting vacations. Start adopting the lifestyle of a fixed income, if that’s where you’re heading.

NerdWallet
When it comes to credit cards, insurance, loans or expenses like hospital costs, consumers make almost all their decisions in the dark. NerdWallet is changing that by building accessible online tools and providing research and experts that can’t be found anywhere else, all to help consumers take back control of their choices in a marketing-driven, trillion-dollar industry. Find out more at www.nerdwallet.com.

The Forties: Staying Focused

Retirement Week continues! Every day we are posting retirement advice from NerdWallet. Read about preparing in your Twenties and Thirties. Today’s focus is on the Forties.

There’s one truism about retirement that has stood the test of time: It’s never too late, or too early, to start saving. Whether fresh out of school or winding down in a career, there are things you can do to successfully prepare your nest egg, as well as places where it’s easy to stumble. Financial institutions such as Vinton County National Bank can help you set up a retirement account  and personalized plan. But it’s up to you to do the heavy lifting throughout the decades.

 

By Cait Klein, NerdWallet

Despite having another twenty years until retirement, it’s time to get more serious. If you’ve been heavy on the investments and stock portfolio, you may want to start pulling back a bit and shifting to more conservative strategies, such as government bonds. One rule of thumb is to subtract your age from 110 and to have the result be the percentage of your savings that’s invested in the stock market. For example, 45-year-olds may want 65 percent of their savings in stocks as opposed to the 80 percent or more that 30-year-olds might want. Consider refinancing your home if there are better rates available. It’s also time to start paying down credit card and other high-interest debts and allocating that money back into your future.

Don’t let your current life get in the way of a future one — particularly in your forties. People often take a detour from saving to fund higher education for their children. But doing so could put both generations in financial danger. If you aren’t prepared for retirement, you could be a major burden to your own children, preventing them from establishing savings. It’s important to have three to six months’ living expenses saved in an emergency account to prevent the need to draw on retirement funds in the event of a medical crisis, roof leak or for higher education.

NerdWallet
When it comes to credit cards, insurance, loans or expenses like hospital costs, consumers make almost all their decisions in the dark. NerdWallet is changing that by building accessible online tools and providing research and experts that can’t be found anywhere else, all to help consumers take back control of their choices in a marketing-driven, trillion-dollar industry. Find out more at www.nerdwallet.com.

 

 

Better Together

Some things are simply better together.

That’s how we feel about our checking and savings accounts here at VCNB. One is great but the two are even better together!

300X600 Audience Network (VCNB)Think of your checking account as a place to manage your money. This is a transactional account from which you can make frequent withdrawals. You can do this by making debit card purchases at point-of-sale machines or by writing checks. You can make ATM withdrawals or come into the bank to withdrawal or deposit money. You can even pay bills online.

A savings account is a different kind of animal. Instead of using this account for daily transactions, a savings account is used for . . . you guessed it! Saving money!

It’s a great place to tuck away funds for an emergency or for a rainy day. If you’re planning a vacation or getting ready for Christmas, a savings account is a great option for keeping those funds separate from your daily spending money. While it’s kept in savings, your funds will grow some with interest.

Because federal law dictates that you can only make six savings withdrawals per month, this is a perfect place to park money and forget it until you actually need the cash. One time or periodic transfers of funds from your checking to savings make saving money much easier.

Right now, we are rewarding customers who open a new checking and savings at one time. From now through March 31, 2015, open a Checking My Way or Classic checking account and accept a debit card to receive a cash bonus of $100. If you open a Passbook savings account at the same time as the checking, you will receive an additional cash bonus of $50.

To receive the bonus, customers must make a $100 minimum deposit into the checking account and a $100 minimum deposit into the savings account. The account can be opened online or at a branch with a coupon requested online.

Want more information? Be sure to read the terms and conditions pictured below. Simply click on the photo to enlarge. Are you ready to open your new accounts? Click here!  

Checking + Savings Terms and Conditions

 

Teaching Kids To Save

Each year VCNB offices participate in Teach Children To Save, a nationwide effort to, well, to teach children to save money. Staff members go into classrooms in local communities to talk with youngsters about why it is important to save money and the difference between needs and wants. We think it is important to give kids practical tips that will help them become money smart adults.

Would you like to teach your kids good spending and saving habits? Here are a few tips!

Piggy bank - whiteFeed the Piggy – Little kids like to get money and they think it’s fun to drop change into a piggy bank. Periodically help them count the contents of the bank so they can see how much their savings have grown.

Needs Versus Wants – Teaching kids the difference between needs and wants will help them make wise decisions today and in the future.

Set Savings Goals – If your child wants a new video game, offer to pay half if they can save the rest of the money. Having a goal in mind, especially if it is something they really want, will help them stay on track.

Make Saving Easy – If your child receives an allowance, break it down so saving is easy. If they receive $5 and the rule is they must save a dollar a week, give it to them in dollar denominations so there is no excuse for not dropping the dollar in the bank. It may even be fun to help them count their savings every week and talk about how good it feels to save.

Open an Account – Regardless of their age, open a savings account for your child. When they have birthday money or when their piggy bank gets full, you can bring them to the bank to deposit funds, have their passbook stamped and watch their account grow. At VCNB, we have savings accounts for minors that require no minimum balance to open. We also have coin counters at several locations to help adding up all that change easy.

Teach in Every Day Life – Embrace opportunities to talk with your kids about money and spending and how things work. If you pay for a restaurant meal with a credit card, explain how credit cards work and why you are using one. When you swipe your VCNB debit card at the grocery, talk with them about how your debit card is tied directly to your checking account and that a swipe is the same as handing over cash. Teach them to comparison shop at the store and how to understand the unit price listed on the store shelf. These are skills they will use for the rest of their lives.

Lead by Example – Talk with your kids about your savings goals for retirement or even how you are saving a few dollars each paycheck for the family vacation this year. Your kids will follow your lead so find ways to be a good role model