Investing Guide for the Group of Irregular Income

Are you one of them, Group of irregular income? I understand that most freelancers and also small business owners will be the “members” of this group. To be honest, I’m also one of them. Being a small business owner, my income is mostly depending on my business and I can tell you that a business is different with a steady income job, the income is different each month. This is one of the challenges that you might encounter if you want to start your business.
In this article, I would like to share with you the investing guide for the group of irregular income. Although the main target of this article is on the group of irregular income, but I think this guide is also work for any one especially those with tight budget over their steady income.
Preparation before investing Your Money – Budget Your Money
Yes I agree that budget your money is quite boring and annoying. However, from the group of irregular income, we have no choice but have to make a plan to use our money. Planning is important to an investor and budget can help you build a system to control your expenses. There are a few points that you must pay attention on budgeting your money, especially you are from the group of irregular income.
For the first 3 months, set a budget and get the average figure for your income and expenses and also categorize your expenses. The main purpose is to know your habit on spending money.
Use the information you collected for the first 3 months and predict your expenses ahead and then set a budget that included an investing account. This account will be the place where you save a certain amount of money for investing.
Then building up an emergency fund at least 4-6 months. The main purpose is to secure your life just in case anything happens in future.
If needed, try to re-allocate your money in the budget again every 1-2 weeks. This is one of the important steps for budgeting over irregular income. This will ensure your money is enough for the next pay day by reviewing your budget from time to time.
Before this, I wrote a few articles that are about budgeting which might help you:
Learn and Start Investing : Start Small with simple baby steps
I prefer to get started small in everything. This will be much easier for my mind and get motivated to take action. I usually become procrastinate and stress if I want to start something very big and complicated. Eventually nothing is done by me. So I prefer baby steps especially invest using my irregular income.
Learn “how to invest” frugally – Investing is a skill that we must learn. We cannot just jump into the market and invest our money. This sound like gambling and not investing, isn’t it? So I always try to learn and gain information before taking any actions. Since I have a budget, the money for me to take any investing courses, buying any reports or books are quite tight. So I usually read books and reports for free from local library and also local book stores. If you can take good care on their books, you are welcome to spend time reading in book stores.
Always invest with small capital – Yes, sometime I come across some of the investment that can bring more profits in a shorter time. However, those investments usually need a lot of money to invest. For me, I usually let them go and look for those small capital investments. I think stocks, forex and also mutual funds are a good start for. This is because with a small amount of money, you can start investing and gain experience.
Dare to loss “small” – So far I never heard or see any investors that do not loss any money along their life in investment. Everybody will lose money in investment. The key here is how you learn from the losses and then make more profit next time to cover it. So “Exit strategy” is playing an important role here. To minimize my losses, I always have an exit strategy. Since my income is limit and so is my investment capital, I must learn how to control the losses from investment and protect my capital.
Diversify your investment – There are always some argument between putting all your eggs in one nest or diversify them. To me both of them have their pros and cons. However, for irregular income group, I will recommend diversify. The reasons to do that are:
1.   Diversify means diversify the investment risks
2.   Diversify means diversify your investment capital and hence reduce the impact of losses into your capital.
Because our capital is limited, we must learn how to manage the risks of investment and also protect our capital from being burnt out by the market.
Conclusion
No matter what kind of job, income or business you have, you must learn how to manage your money, how to invest them and plan your future financially. Yes I agree that, sometime, there are a lot of negative voices coming out from my head telling me that “I can’t invest because of my irregular income” or “There is nothing you can do with this kind of irregular income”. This kind of negative voices and mindset don’t block me at all because I have a goal, a goal to achieve financial freedom by age of 30. I know I must do something to achieve my goal and have better future. So I still continue to learn how to prepare my irregular income, get myself ready and invest. You might also have the same condition that I have. But don’t give up! There is something you can do on your personal finance and future, even your retirement. This only depend whether you believe it or not. IF you believe, nothing can block you!