Unstable Income? 4 Kick-Ass Tips To Stick To Your Budget


Just imagine the condition of freelancers, salespeople, businessmen, and self-employed people. All of them have an irregular or fluctuating income. Still, they’re managing their budgets like a pro. Ever wondered how?

Self-employed people don’t have any idea of how much they will earn in a month or when they’ll get paid. They have a crazy work schedule and an uncertain future. They don’t know which month will be a complete disaster. Still, they are managing their budgets. It’s because they use these 4 kick-ass tips. If you have an unstable income, then you can use these tips as well.

Check out these 4 tips that you can use to stick to a budget with an irregular income.


Stacy B. Miller is associated with OVLG for more than 6 years as an content editor. Both her work and passion involves writing financial articles on different topics like debt, credit, mortgage, insurance, etc. You can follow her Twitter and find her over at Kiss Your Money.

4 Tips on budgeting with irregular income:

1. Create a bare-bones budget based on your baseline

You know your baseline, i.e, the minimum amount you earn in a month. Just look at your lowest-paid month in the last year. Calculate how much you earned.

Create a bare-bones budget on the basis of your necessary expenses in a month. Necessary expenses include groceries, mortgage, utility bills, childcare, etc. Suppose your total necessary expenses amount to $450. This is the minimum amount you need to earn every month to cover your basic expenses.

Once you have listed the expenses, put the amount you’ll spend on each item inside different envelopes. For instance, put $100 for the cable bill, $300 for groceries, etc.

Related: Reverse Budgeting Vs Traditional Budgeting

2. Look at your discretionary expenses

Remember, you have an irregular income. So you have to plan everything carefully. You have to create a list of discretionary expenses and rank them in the order of your preference. Usually, entertainment, hobbies, and dinners come under the discretionary expense category. Have a look at your bank statements to know how much you spend on this category. Since you have an irregular income, so it would be wise to be on a spending diet and reduce your discretionary expenses.

Related: Taking the Zero Day Challenge – A Month in Review

3. Spend your previous month’s income

Once you have calculated your necessary and discretionary expenses, calculate how much you earned last month. Use your last month’s income to cover your next month’s expenses. This way you’re budgeting on realistic figures. There is no place for imaginary figures or projections.

Now the big question is – what will you do with your present month’s income?

Well, the first thing you need to do is calculate how much you need for your bare-bones budget and discretionary spending. Deposit this amount in a regular checking account just after receiving your paycheck. Although you have a fluctuating income, you have a steady salary every month. This is quite amazing if you think about it seriously. This is your savings. In the past, you might have spent your entire month’s income due to unplanned spending. But not now. You can start increasing your savings gradually.

Related: Download Our Free Monthly Budget Sheet

If your savings don’t increase even after following this tip for several months, then have a look at your bare-bones budget again. It seems something is not right. Either your budget plan is not right or you’re spending lot more than what you’re making every month.

4. Don’t depend on your credit cards

The idea of using credit cards for buying anything you want is quite appealing. But remember one thing, you don’t have a regular income. You have no idea how much you’ll earn next month. You’re not even confident that you’ll earn even a single penny next month. If you use credit cards and promise to pay something later, then you’re just inviting a big trouble in your life.

You can use credit cards as long as you can pay in full every month. Can you do it every month? You have an unstable income. If your income is less in the next month, then how will you cover the purchases you made in the last month?

If you repeatedly fail to pay your credit card bills every month, the compounding interest will increase your outstanding balance. The consequence will be disastrous. Your outstanding credit card bills will have a direct impact on your credit score. Your creditors will either call you or assign accounts to debt collection agencies for collecting payments.

In such a scenario, you’ll have 2 options:

The first option is to negotiate with creditors and arrange an affordable repayment plan.

The other option is to get help from a debt management company to help you get a good repayment plan.

The choice is yours.

If your negotiation skill is not that good, then it’s better to enroll in a debt management program since that would help you avoid any hassle. Just keep it in mind a few points:

  • You have to pay a fee to the debt management company

  • You need to do research and find out a reliable debt management company

  • Always remember you have to act as per the instruction of the debt consultants

  • You have to follow a budget. Yes. You have to follow a budget even now


Life is like a ride on a roller-coaster, full of ups and downs. You have to be prepared for both of them.

What if you don’t earn a penny for a few months? Who will buy food for your family? Build an emergency fund so that you have 6 months of expenses on hand.

Create a savings account so that you can build a fund for the rainy days. This is a separate account. After you have deposited your paycheck in your checking account, don’t forget to transfer 10% of that money into the savings account. Bad months may come along, the emergency fund will help you survive those months and be on the right financial track.

Yo, Lily back! Do you have an unstable income, Braveheart? What drives you to stick to your budget? If you were offered a stable 9 to 5 salary that will always provide versus a very unstable income for the same salary with room for possible growth – which one would you choose? Why?

18 thoughts on “Unstable Income? 4 Kick-Ass Tips To Stick To Your Budget”

  • A variable income is really hard to manage. Mine is, and although I know roughly what I’ll make each paycheck, sometimes that goes way down depending on school holidays and/or absences. Luckily, I’m not our household’s main breadwinner, but if I were, I would definitely budget for the worst-case scenario and have a big cash buffer. Thanks for the great tips, Stacy!
    [email protected] recently posted…My Inspirations for Location Independence

    • Glad you liked my tips. But can’t help to give you a small piece of advice. Please have a cash buffer for the worst-case scenario. If the main breadwinner of the household gets into a financial trouble, then you can give him/her financial support. Got my point?

  • My dad was a self-employed CPA for a majority of my childhood. He prepared personal taxes in the beginning of the year and would receive about 80-90% of his income between March and June. That meant HUGE swings, and the fall and early winter was always scarce. He had other business clients who needed help with payroll and things so it’s not like he had $0 coming in for that entire stretch, but it was definitely a budgeting challenge for him I’m sure – especially when my mom wasn’t working, or was working for him. The ‘lowest month’ thing wouldn’t exactly have worked for him since he literally had $0 months sometimes. 🙂 Aside from that, he basically did exactly how you described – and was just good at following the budget once it was put in place.

    It was a bit easier for him because he KNEW how cyclical his work and his pay would be, so he knew he couldn’t rely on the same income in May as he would in October.

    If you’re just new to the game and end up being paid kind of cyclically like that, I can imagine it’s a difficult thing to realize and wouldn’t be surprised if some folks thought “Oh dang look at how much money I made in May! Let’s live it up!” without thinking about the leaner months to come.

    Good tips here 🙂
    Dave @ Married with Money recently posted…I Hate Starter Homes

    • Those are some amazing lessons from your father! Than you so much Dave for sharing! Your dad sounds so impressive, raising a family on variable income is certainly a feat.

    • Your dad was a financially responsible person. He knew how to stick to budget with his variable income. Kudos to him! The good part is that he never exhausted the money earned in the peak months like May and June. He saved it so that your family can run smoothly throughout the year. A trick many people should learn in our country.

  • All are very good points. While they seem critical on a variable income, I think even if you have a regular paycheck you should follow each point. Split your expenses between your needs vs. wants, have an emergency fund and don’t depend on your credit card.

  • I have an 8-5 and a stable paycheck. But I do like the idea of exploring different streams of income and starting new businesses. I am extremely risk-averse, so I like to have the stability of a stable job and the opportunity to earn extra income from side hustles.

    Living on last month’s income and having a big savings account is a great idea since you already know how much you have and have a cushion for unexpected events. ^^

    • This is the idea situation. When you have a stable paycheck, you can think about earning extra income from side hustles. There is no risk. But when you have a variable income, I think it becomes necessary to explore different streams of income. Suppose if your business fails, you can atleast have fall back on the other sources of income. You won’t be in trouble.

  • Not gonna lie, I too am not much of a risk-taker, hence sticking with my 9-5 and blogging on the side until it becomes substantial enough to quit the day job. The hurdle with that is that it will take much longer for my blog to get ground because I can’t dedicate as much time as if it were a full-time stint and my life literally depended on it. Your ideas for budgeting on variable income is just as important to practice in life in general, so great tips. I hope this helps people stick to spending what they have instead of borrowing credit because that’s the worst way to get yourself into money troubles!
    Sylvia | Mommy Over Work recently posted…Best Tips to Save Money on Amazon During the Holidays

    • Oh yes I would not want the pressure or blogging as a full time income. I’m very skeptical that blogs can even make money (more than ordering a pizza).

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