How to Budget on an Irregular Income

Updated on: by FStewart

Tips on budgeting an inconsistent incomeOne of the greatest challenges of many work-from-home jobs is that income is often irregular or inconsistent, especially if working as a freelancer.  This means that some months there may be extra money, some months there is just enough, and others, well, they will fall short of enough to pay bills.

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This is referred to, in many circles, as feast or famine, and it can make budgeting a real pain.

These tips should help keep you from sinking on those short months.

List Expenses

Budgeting for an irregular income starts the same way as budgeting for a regular income.

List your regular monthly expenses, starting with those set expenses that cannot be changed.

Then list those that you can adjust if necessary.

Examples of fixed expenses include rent or mortgage, automobile payments, and utilities.

Next list things you can control such as groceries, and then list consumer debt.

Cut Costs Where You Can

If you can reduce a cable bill by switching to Roku or another streaming device, do it.

If you can reduce your electric bill by remembering to turn off lights and turning the television off when you leave a room, do it.

Can you refinance a car or mortgage and reduce monthly payments?  Do that too, if it makes sense.

Prioritize Expenses

Now, prioritize those expenses in the order they must be paid so that you know what to pay first with the money you have in months that you fall short.

This may not be exactly what you are thinking.

For example, your family must have a place to live, they must have electricity, and they must have food.

You are going to buy groceries first if you need them, even if some other things have to be late.

Next, you will have to pay for your electricity, water, and shelter so that you can have a place to live.

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Entertainment, such as cable, comes last, and so does debt.  After debt, list those variable expenses such as maintenance, entertainment, dining out, and other expenses that you can do without if you must.

When there is More

In the months when you have more income than needed, put a portion of it back for those months when there isn’t enough.  The goal is to pay all bills every month, but a prioritized budget will allow you to make better choices with what you do have on the months that there just isn’t enough, and hopefully encourage you to save a portion of the extra you have during the “feast” months for those “famine” months.

What Does this Mean?

The battle of the budget versus the freelance lifestyle. Tips to make it work.Frankly, it means sometime you may have to make hard choices.  The end goal is to budget in a way that you cover everything as much as possible, put back extra when there is some, and know what to pay first to keep you in the best financially sound situation possible.

By knowing your expenses each month you know what your minimum goal income has to be, and by having them prioritized, you have an action plan to best use what you have in those months that you do not meet your income goal.

It helps to know your grace periods to keep yourself out of credit trouble as much as possible, and do your best to avoid late fees and penalties, of course.

If you are in real trouble every month, there is likely a need to re-evaluate completely. You may need to pick up more work, increase your rates or consider if this is the right path for you all together.

This budgeting method is meant to help those with sufficient, though irregular income, make the best use of the funds they have at the time.

What are your budgeting tips for an irregular income?

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Corina Ramos

February 4, 2016 at 1:49 pm

Hi Faith,

Thanks for these great suggestions. I do these things and it helps me stretch my income. Another thing I use is coupons…not extreme but I save a pretty penny on groceries. 🙂

Thanks for sharing!

Cori

Miranda Grimm

February 4, 2016 at 2:48 pm

Yes! Same here. I know I have said it over and over, but the Savings Catcher app from Walmart is one of my favorites. Its just too simple not to use. Of course, CVS has a great coupon system too. Meal planning has helped me budget out my grocery bill.

My husband’s income is also inconsistent, but we have a general idea of what we can expect as a minimum earnings per month. We make sure to live within the means of that. Anything beyond, goes into the bank for rainy days and those random emergencies that seem to be happening quite often lately!! I do miss the days when our income was steady and stable, knowing exactly what we would be seeing every Friday. But the unlimited potential we see now is definitely worth the trade! I love having so much control over my life and my income.

Andrea Stang

February 12, 2016 at 12:04 am

A great tip to “save a portion of the extra you have during the “feast” months for those “famine” months.” I’ll have to look into the coupon apps suggested. I went from a full time, predictable income to a freelance, inconsistent income and I am still learning how to budget along the way. It’s exciting to have the potential to make more than I ever could have in my traditional job though. It’s just a different way of budgeting, for sure! Thanks for this post. I’ll be sharing it.

LEISA GOOD

February 5, 2016 at 6:15 pm

This is a great article. I totally agree. Another reason to have extra income streams that can be pulled out of the “work-at-home egg basket”.

Lee Ann

February 11, 2016 at 10:55 pm

Thanks for such a great post. I really agree with this and all the work I have done online has always been very short to long projects, the longest maybe lasting 3 months. 3 months is not very long to try and adjust a budget.We have cut our cable and went with netflix but kept our internet since I need it to do some work of course. And I try to coupon when I can.