Checking account buffers

Once you go 1099, your income becomes a little more variable.

I say a little more because in the federal space, your work is pretty consistent and likely near full time.

But, there are months where you take a vacation and that means you'll get paid maybe 50% less than a normal full time month.

If you normally get paid $20,000/month and you take a two week vacation, you'll get paid $10,000.

This is not a big deal overall, but if your expenses stay constant and say they exceed $10,000, you will have to transfer in money from savings or elsewhere to cover the difference.

I used to do this early on in my 1099 career, but it became annoying to do it because some months I'd save say $10,000 but then another month I'd have to transfer $5,000 out of savings back into checking.

It made it hard to get the big picture of my finances and plan for investments, savings, etc.

A few years ago I took a page out of Ramit Sethi's personal finance automation system and just stuck approximately two months worth of expenses in my checking account and then automated everything.

Automate your finances

This way I didn't have to worry about "having" enough in the account if my pay fluctuated. The average balance remained about the same.

I recommend you do the same. It will lower your administrative overhead and you focus more on enjoying your life.

Want the full playbook? Check out Going 1099.