If your income changes every month, you're in good company. My husband earns inconsistent income as well. It’s stressful some months and a blessing through others. Honestly, his irregular income forced our family to truly look at our budget each month and stack our needs against our wants, make some hard calls, and keep our emergency fund fully funded.
There's a method to this madness. Let me show you how to budget when you don't have a consistent paycheck.
Living with irregular or inconsistent income doesn’t have to be stressful. Yes, you must keep an eye on your expenses more than the regular person, but that gives you a leg up. Most people live paycheck-to-paycheck and swipe their card hoping they’ll have enough, even though they know how much they make each month!
Let’s get you out of that cycle and learn how to plan for an irregular income.
Find out what you can reasonably expect to earn this month. I look at our last year and start with my husband’s lowest earning month. That gives us some breathing room. If you’re a two-income household, then add all incomes together (post-tax).
List your expenses and put them in categories. I always take tithing off the top first, then list out my four walls: food, housing, clothing you need, and basic transportation. After your four walls, list your debt snowball and their minimum payments and your smallest debt full amount, then your discretionary or want spending (if any), then 3-6 month emergency fund, retirement investment, kid’s education fund, and extra mortgage payments.
Prioritize each expense (with your spouse, if you’re married) and talk through it together. This priority is the order in which you will spend your money. Priorities look different for everyone. Personally, I wouldn’t prioritize a new Instant Pot over paying my electricity bill. I don’t think anyone should. However, you might prioritize a small “fun” category if it keeps you and your spouse on budget. You should prioritize food for the family over your kid’s education fund. That doesn’t mean spending what should be in your retirement savings at Olive Garden. Eating out is a want. Housing is a need.
After you get paid, go over your priorities with your spouse again and agree on what you’re paying and not paying for this next month. One month we planned for $4000 and only saw $2800. Our irregular bottom was just reset. We prioritized our four walls, ate rice and beans all month, bought no clothing, and went absolutely nowhere unless we were walking. Every bill was paid. We dipped into our emergency fund, but we survived. Next month, we saw $5000, ate rice and beans and replenished our emergency fund. Communication got us through it and saw us through every month after that.
Saver Street has an irregular income online worksheet that you are free to download and use. It guides you through these steps, so you can plan for an irregular income and really win with money.
An irregular income doesn’t have to be stressful. If you find yourself in a pickle where your spending exceeds your income most months, send us an email. We’d love to help. We help folks with irregular incomes often and get them on the right track to financial freedom. Don’t hesitate. Schedule a coaching session today!
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