How to Budget With Irregular Income
5 steps for budgeting when you have an irregular income.
Travis, who is one of my coaching students, asks: It was easy enough to put together a monthly budget, but how do I manage it when I don’t get paid the exact same amount each month or on the same day?
This is a great question because many people, especially those who are paid on commission, do freelance work, or are self-employed earn income that changes from month to month.
Budgeting can be even more challenging when you have irregular income because it’s easy to overspend in the good months and get caught short in the lean ones.
The secret is to create a plan to smooth out your spending so it stays the same every month no matter if your income is up or down or when it comes in. Follow these 5 steps to budget when you have irregular income:
- Estimate your income: Figure out what you earned last year and divide it by 12 to come up with a monthly estimate. If last year was great and you don’t believe your income will be the same this year, use a smaller percentage, like 90%. Or if you’re confident that this year will be better, use a higher percentage like 110%. But my advice is to work off a conservative income estimate. Read More »