Here’s something I used to be asked frequently:

How do I even out my income? Some months I have huge inflows of cash, some months I have just a trickle. How do I manage those ups and downs and still pay my normal monthly bills?

This question can arise for many people, in many different circumstances. Here are just a few examples of who might benefit from the answer:

• Sales People (anyone who makes a commission)
• Freelancers
• Self Employed People
• Entrepreneurs
• Small Business Owners
• Artists
• Musicians
• People that have income coming in on the side
• Retired people living off of investments
• Anyone trying to fire their boss and create their own income

Managing the ebbs and flows of your income (and regulating cash flow) can be challenging if you don’t know how to do it. The answer is actually a very simple concept. It begins with knowing what your expenses are on a monthly basis, and then creating your own income stream to pay those expenses.

To make it really easy to illustrate, I found a much simpler way than creating graphics and trying to type it all out. I’m doing a Pencast with my new SmartPen – a revolutionary device that has already changed my life in the short week that I’ve owned it. (More on that later.) I’m able to draw and simply explain a concept to you, just like if you were a client sitting at my desk! Brilliant. {If you are reading this in an RSS feed or email, you may need to click through to the Penny Sophisticate site.}

Click on play below to watch. It’s short and sweet. ;-)

A key piece to this concept, again, is knowing your expenses. We’ll talk more about getting clear on your bills in upcoming posts. In the meantime, we’ll assume you have a general idea of what your monthly bills are, and that you’re learning this concept in order to begin applying it when it’s appropriate for you.

Let me know if this was helpful? Did it make sense? Could it apply to you? Or someone you know? Do you have any other questions? I’d love to hear your comments…