How to Budget with an Irregular Income

Budgeting is easy to do when you’re getting the same amount every pay, but it can be harder to manage when your income varies from month to month, or even week to week. This is an issue for a significant portion of the population as more people than ever before now work in jobs with fluctuating incomes. These include freelance gigs, commission-based roles, seasonal jobs and on-demand services, and these workers receive payment based on either the availability of work or their decision to take on certain opportunities.
 
These jobs can come with some major benefits such as flexible working schedules and the possibility of earning higher income at certain times. But they can also be unpredictable and are more vulnerable to the impact of external factors (such as a global pandemic) making it hard to know for sure how much you will earn so you can plan for the future.
 
Managing your money can be hard if you work in a job with an irregular income, and here are some tips for creating a budget to make it easier:

Map out your expenses

Use a piece of paper or create a simple spreadsheet and write down literally all of your expenses so you can keep track of them. Include all of your expected costs going forward, based on previous months, such as rent, petrol and utilities, as well as groceries. Don’t forget to include any common small expenses such as educational fees or any memberships/subscriptions.

Forecast your upcoming income

Now create a full summary of all expected income for the coming months and try to map this out as far into the future as possible. Using past experience, assess whether there are certain times when your work usually increases or decreases and, once you know which months are likely to have the lowest income, map out a way to cover these shortfalls.

Save extra income

You want to make sure you don’t overspend in months when you have a lot of money coming in and then leave yourself in a tough spot during leaner times. To avoid being caught short, it’s important to have a clear strategy for saving money that you can implement year-round.
 
Save all surplus income to a specific account to help build up an emergency fund, which should ideally contain at least 3-6 months of monthly expenses to cover you if you’re ever out of work or need money for things like a flat tyre or an unexpected plumbing issue. You need to be very disciplined about making sure you only use this emergency money on genuinely essential items, and it can help to set it aside in a separate account to which you don’t have daily access.

Assess your cash flow

Once you have clarity about your current income and expenses, it’s a good idea to take some time to look over them and figure out how you can do things better. You’ll probably find you’re wasting money unnecessarily on rarely used television subscriptions or gym memberships, or over-spending on non-essential items like video games, clothing and eating out. Tighten up your spending and keep treats for special occasions, and you’ll find yourself with a lot more cash to put into your rainy day fund.

It's also important to pay off credit cards as quickly as possible to avoid expensive interest fees. If you’re having trouble doing this, it might be worth looking into taking on some additional part time work to bring in extra funds.

However you approach it, the most important thing is to be proactive when it comes to managing an irregular income and to make sure you’re always in control of your money and know what’s coming in and out.
 
The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.