How to budget when you have an irregular income

Looking for ways to maximize your irregular income?

You are in the right place!

Whether you’re a business owner, a remote employee, or you run a blog, preventing famine cycles is vital to setting yourself up for financial success.

Let’s take a closer look at how you can plan your budget when your income is not always the same.

What does “irregular” income mean?

Irregular income means not having a steady flow of money. This applies to bi-weekly payments as well as monthly, quarterly or annual payments.

You may have irregular income because:

• Work for a company that only hires during the summer or other season
• Have variable client workload requirements
• Or you are still in the early stages of starting a business

When you’re working with an unpredictable income, budgeting well can help stabilize your finances—and prevent the domino effect of late payments. It can also help ensure you always have enough for essentials like rent and groceries.

But it’s not always easy, is it?

How can you create a supportive financial plan when your money fluctuates from month to month?

Keep reading to find out.

How to budget when you have an irregular income

Here’s how to plan your finances when you have a variable income.

Track your monthly income and expenses.

Get clear on how much you’re earning by monitoring your credit and deducting your expenses.

Get into the habit of doing this every time you get money or need to pay a bill. Accurate tracking over time will help you better average your monthly income.

Speaking of which…

Average your monthly income and expenses.

Compare your monthly credits and debits.

How much do you earn on average per month? Calculate them by collecting your pay stubs, bank statements or invoices for the past six to 12 months. Then divide your total income by 12.

How much are your expenses each month? Look at your monthly bank statements and bills, add them up and divide by 12.

Knowing your average monthly income and expenses will help you plan a more accurate budget.

Use zero-sum budgeting.

Assign a specific purpose to every dollar you earn.

This method (also called zero budgeting) can help you stretch your money and get the most out of every penny.

Implementation procedure:

1. Get your average monthly income that you found above.
2. List all your monthly expenses – including fixed and variable costs. Add your monthly savings goal as a fixed expense.
3. Put every dollar to work. Prioritize core accounts, set aside money for fluctuating expenses, and save a target savings amount in your savings account.
4. Track and adjust your budget as needed. For example, if you need more money for groceries, find another area of ​​the budget that you can cut (like entertainment).

*Pro-Tip: Create a “salary” based on your average monthly expenses. Use this as your monthly budget and plan your savings goals accordingly. For example, you might need $3,000 a month to cover your expenses. If you earn between $2,500 and $4,000 per month, you will need to put money away during the high months to cover your debts in the low income months.

Consider savings an expense.

Again, speaking of savings, it’s so important to set aside a certain amount each month – and treat it as a non-negotiable expense.

Include it in your budget just like any other necessary debit. Better yet, set up an automatic monthly transfer from your checking account to your savings account so you don’t have to think about it.

Open a curve account.

Treat yourself to more financial security by adding money to a curve account.

A checking account is a second checking account that you can dip into to pay for unexpected expenses like a flat tire or an emergency dentist visit. An emergency fund will help you cover these surprises without having to tap into your savings account.

If you haven’t created a new account in a while, you may need to go in person.

Here’s what you need to open a bank account:

• Your social security number or tax identification number
• State-issued ID
• Address proof
• Initial deposit

Call ahead if you are opening a business inspection so they can let you know which official documents you will need to bring.

Depending on the financial institution you choose, you can open a second checking account by logging into your online banking.

Adjust your budget as needed.

Keep a close eye on your budget plan and improve it if possible.

Every month don’t forget to:

1. Review your monthly expenses.
2. Identify areas for modification.
3. Decide whether to reduce costs or increase revenue.

Then create an action plan. For example, adjust savings automation or automatic bill payments – or adjust your allowance for variable expenses. When it comes to income, decide if you’ll need to apply for jobs, make calls, or run ads to support what you earn.

Work at Home Woman has endless resources for making money from home.

Create a savings withdrawal plan.

At this point, you should have a regular checking account, a curve checking account, and a savings account.

Your regular check must cover your fixed and discretionary expenses. Your checking account must cover unexpected expenses. And your savings account is there to help you through the “need months.”

Make sure you have a plan for the latter.

This is key to making your money stretch so you can live comfortably.

For example, if you have a monthly budget of $3,000 and you earn $2,500 to $4,000 per month, you will need to pull $500 from your savings during low income months. If you have four low months in a year, you’ll need at least $2,000 a year in your savings account.

That means you’ll need to save $167 a month to reach your annual savings goal. Or you’ll need to save $500 in at least four high months. It also means you can’t take more than $500 out of your savings in a low month.

Consider increasing your savings goal to give yourself more breathing room.

For example, $200 per month will help you save an additional $396 per year on top of the $2,000. Kick that up to $209 a month and you have an extra $500 a year – leaving you with $2,500 in your savings account. That gives you five months worth of cushion instead of four, just in case.

*Pro-Tip: If possible, create a new “zero” for your savings account. For example, you can think of $1,000 as “zero.” This means you consider your account “empty” once it reaches $1,000. In this case, you’ll need at least $3,000 a year in your savings account — $1,000 as a down payment and $2,000 to cover your lean months. This gives you an EXTRA $1,000 cushion if needed.

Let your money work for you.

Make the most of your money by carefully managing your expenses and choosing a high-yield savings account.

You can also meet with an advisor to learn about investing and preserving family wealth so you can create an accurate budget that supports your long-term goals. This helps motivate you and gives you a greater sense of purpose as you manage and save money.

Take advantage of funding for women entrepreneurs.

If you’re a female entrepreneur, there are resources (made just for you) that you can use to get your money further.

It’s tempting to want to go it alone – but learning best practices will help support and protect your business. It also allows you to learn from other like-minded business owners. (You never know what new trick will help you get ahead.)

Consider for example:

• Join an online financial group for women entrepreneurs
• Sign up for financial newsletters for women
• Attending financial conferences led by women
• Hiring a trusted financial advisor
• Reading books on finance
• Participation in webinars

Set yourself up for success.

Budgeting for irregular income requires careful strategy, especially when you have unexpected expenses.

It’s not a flexible process, but it can help protect you from going into debt or falling behind on your bills (like those pesky streaming services).

Remember, average your monthly salary and expenses, allocate every dollar to an expense, and make your emergency fund a non-negotiable item. Open an emergency checking account and adjust your budget as needed so you can spend as you see fit.

By following the advice in this guide, you can ensure that your living needs are met and that you can cover your basic expenses (even during lean months). Don’t break the cycle even during periods when you are earning extra.

For more tips on managing or making money, check out the resources on The Work at Home Woman. And for a huge list of work from home jobs, check out our work from home job board.

Here’s to your success!