Income planning

The nice part about a salary is that it's consistent, meaning you can plan around it.

You know that every two weeks, you'll get a check that's the exact same amount. You can allocate it to expenses, savings, investments, etc.

A a 1099 in the federal space, you will have more consistent income than a 1099 in another industry, but it will vary month to month. You might take a few weeks of vacation and then your check gets halved.

The key to managing this is to plan out your income on an annual basis, and then average it out by month.

Say you plan on working 1700 billable hours this year.

You would take 1700, divide it by 12, and then multiply it by your billable rate. That's your monthly income.

If you bill $150/hour, it would look like this:

1700 / 12 = 141.67 hours/month.

141.67 x $150/hour = $21,250.50/month.

Plan around making $21,250.50 / month and allocate it towards taxes (you pay those yourself as a 1099), expenses, savings, investments, etc.

As a 1099, sometimes you need to do a little extra work to replicate some of the consistency you had as a W2.

Want the full playbook? Check out Going 1099.