savings

10 ways to save regularly with irregular income

When it comes to saving money, everyone has heard the mantra "pay yourself first," but this is not easy to do when you work for a company that doesn't offer steady pay or an automatic "pay yourself" option with direct deposit.

"When you're faced with a job and an income stream that is 'lumpy,' commission-based or paid in cash, the onus is really on you to follow a financial game plan," says Brad Stroh, co-CEO of Freedom Financial Network, a consumer debt-resolution company based in San Mateo, Calif.

Save regularly
If you're one of the thousands of people who gets paid irregularly, how can you save a sizable nest egg or an ample rainy-day fund? Follow these 10 tips to save successfully.
10 tips to save successfully
1.Automate yourself
2.Automate your debt
3.Open CDs
4.Start low, finish long term
5.Go for zero-based budgeting
6.Get real with your goals
7.Kid yourself
8.Spend more on your house
9.Bank your bonuses
10.Celebrate regularly

1. Automate yourself
Even if your employer doesn't offer deductions to an automatic savings plan, set it up yourself with your bank accounts. "Don't just keep your funds in a checking account with a mental note that they're 'saved'," says Stroh. "Instead, put them in an investment or savings vehicle that you determine beforehand." For example, set up your checking account to automatically transfer $100 into savings on the first of every month, without any additional effort on your part. You have the power to cancel a payment, though you may have to give plenty of advance notice to do this. But this extra step forces you to do more work if you choose to stop paying yourself.

Some people may not be able to completely automate their savings, but the benefit will be the same if they follow a savings routine. "My company pays me in cash (after taxes), so I don't have the automatic deposit option," say Bree Shannon, a Long Island, Calif.-based singer for a cruise line. "But I do write myself a check that goes into my savings account every pay (period)."

Whether you initiate an automated process or write a check, following a routine plan is the best way to save, says Lewis Mandell, professor of finance and managerial economics at the State University of New York in Buffalo. "It forces you to live on less money, which means that you scale down your expectations," he says. "After a while, you don't even notice that you're not spending as much."

2. Automate your debt
People are often more willing to pay their creditors than pay themselves. So even though your "income" isn't automatic, your "outgo" probably is. You can use this to your advantage, though, by setting up an automated electronic bill payment schedule for your debt. "If you have credit card debt, you need to pay it off. You're saving by paying that debt down," says Peter Bielagus, a financial adviser and author of "Getting Loaded: A Complete Personal Finance Guide for Students and Young Professionals."

"If you have $1,000 earning 4 percent (in a savings account), whereas your credit cards are losing 18 percent, then I'd much rather you pay down $1,000 on your credit card." Once the debt is paid, you can transfer that same monthly payment into a savings account.

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