Many people work in jobs with inconsistent monthly income. Whether it's sales commissions, freelance work, or other business ventures, you might find yourself in a position where you income changes each month.
Here's a step-by-step process for how to handle this situation in WizeFi.
Estimate an average monthly income you feel comfortable planning for.
WizeFi requires users to enter one monthly income amount in order to create the financial independence and debt freedom projections. The software needs to assume how much money is coming in so it can calculate your monthly expenses, apply extra money towards your 4-step plan, and determine what your financial future looks like. Therefore, we need to enter one value for this plan.
Note: as your situation changes, you can always change this income in your plan to reflect your new lifestyle or job. Your plan is never set in stone. It can fluctuate as life happens. The point is to estimate a monthly income value that you feel comfortable targeting in order to pay for expenses, build wealth, and reach FI by your desired age.
To estimate your monthly income, look at the last 6-12 months of income you've received, and determine a minimum income you feel comfortable hitting each month.
Ex: You work a sales job and the last few months your income has fluctuated from $10k, $5k, $7k, $2k, $9k, $5k. In this case, you may feel comfortable living on a budget and wealth building strategy assuming $6k of monthly income.
From here, you can create your financial independence plan assuming you'll make an average of $6k per month. This will allow you to plan you expenses, apply extra money towards building wealth, and seeing when you could reach financial independence. If you're not satisfied with the result, you can continue modifying your income until you reach the outcome you want, then set a personal goal to hit that income goal each month (or on average throughout the year)
Adjust your plan as needed. Once you've adjusted your FI plan to fit your goal, it's important to update your income and goals as life events happen. You might get a promotion or switch jobs with a different compensation structure. When these life events happen, make sure to update your income and adjust your plan to account for this new situation. These variables can change your ability to reach FI, so it's important to frequently update your plan to make the most effective decisions for your financial future.
To adjust your income in WizeFi, go to the Plan page, toggle to the "planning" mode, then modify your desired income stream.
Make sure to save your changes.
