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.
- How cooperatives improve small town economies - May 8, 2022
- Metaverse business idea: virtual world tour guide - April 15, 2022
- Make extra money from extra workspace: co-working and 3rd workplaces in small towns - March 28, 2022
- Trade show booth design trend: hand drawn visuals - March 21, 2022
- New business sign design? Don’t use cursive script - February 14, 2022
- Way more people prefer rural than urban, new Pew Research study finds - February 1, 2022
- Top 5 Rural and small town trends 2022 - January 3, 2022
- How to start a real small small business - December 17, 2021
- Tip for better pop-ups and shed businesses - December 5, 2021
- Small town business idea: cat grooming - November 15, 2021
I’m so glad you blogged this!