Home > Budgeting > How Do You Prepare A Budget With Irregular Income?

How Do You Prepare A Budget With Irregular Income?

Today I’m terribly excited to be doing  a blog swap with John from Frugal Rules. Don’t miss my post about being an advocate for your own health care over at his site, AND you still have time to enter the giveaway for $100.

Call me a nerd, but I love to budget! Budgeting can be an easy exercise when you know what your income is going to be from month to month. But, alas, not all people know what their paycheck will look like each time. This can be a common situation given the number of people in sales careers who depend heavily on commissions to make up the majority of their take-home pay. You could also be like me and be self-employed and have fluctuations in your monthly income. Either of these situations can make living by a budget difficult, but not impossible. So, please don’t allow the situation of irregular income be an excuse for you not to live with a budget. I’ve been able to live with a budget and not know what my monthly income will be for several years and with a few tips you can too.

Know What Your Expenses Are

The most vital thing to setting a budget with irregular income is to know your expenses. To be honest, it’s really an issue for anyone that wants to live with a budget, but for someone who doesn’t know what they’ll make next month this is of utmost importance. The easiest way to determine your expenses is to sit down with all of your bills and notate what each one is. You will then want to add in other expenses such as groceries or transportation costs. It is vital not to underestimate your expenses, especially for food costs as you don’t want to get to the end of the month and have no room in your budget for groceries.

Prioritize Your Expenses Within the Budget

Living with a budget requires discipline, one that can be felt more acutely for someone with irregular income. With that in mind, you need to prioritize your expenses. I am not talking about frivolous things here or your debts, but what it takes to keep your family going and the power on. Start out with groceries, mortgage/rent, utilities and transportation. These are the things that should be put out front and then you can deal with any debts like student loans or credit card debt. Now, some might rebuff and say this is ignoring your debt. Paying off debt is vital and I encourage it, but would you rather pay off your debt or have electricity? I know which I’d choose and setting the budget can help you see that.

What to do With Extra Money You Earn

Save it! Beyond that, look for other things that need to be taken care of but have been neglected. Being self-employed I love months where my wife and I bring in more than we need! The first thing I do is look at my budget to see what line items have been ignored or where not enough funds have been put towards. I see things like retirement, keeping a healthy Emergency Fund, Vacation Fund, entertainment, and really the list could go on. The key is to put a healthy chunk towards savings so that if you’re short the following month you have the cash to access to meet your minimum needs budget. This will allow you to smooth the rough edges that an irregular income can cause and keep you close to your budget.

Give Your Budget Time to Work

I will be the first to tell you that living with a budget and having irregular income can be an unholy matrimony. However, there is hope for the union. The key ingredient is discipline. That discipline can and does take time to develop. I know it did for us. Don’t give up after the first month. Give your budget a few months to work itself out, making minor adjustments as necessary. Once you set your budget, come back to it in a few months to see how you’re doing and if any changes are necessary. When you’re dealing with mainly fixed expenses, there’s likely little fluctuation to be had, but get in the practice of coming back to your budget on a regular interval to see how it might be improved.

Don’t let the excuse of unknown income keep you from having a budget. The difficulty and stress aside, it’s actually quite simple to budget with an irregular income. Do you have irregular income? What have you been able to use to help you live with a budget?


John is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting, and frugal living. John is a father, husband, and veteran of the financial services industry who’s passionate about helping people find freedom through frugality. Visit him at frugalrules.com. You can follow John on Twitter @FrugalRules.

Kim’s comments: With owning my own business I have often had irregular income, and have used that as an excuse not to budget, but I’m on the straight and narrow now.



About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. I have the budgeting sickness too John. I can’t help it, I actually enjoy it.

    On a different note – I am considering leaving my current day job and moving to contract work for the extra money this can provide me – So this advice is indispensable.

    • I do as well Glen. Thankfully my wife does not think too ill of me being a nerd like that. 🙂

      Awesome that you’re considering moving to contract work in the future. I’ll be doing a post on me taking the plunge soon. For us, there were just too many tax and retirement benefits we can take advantage that made it a no brainer for us.

  2. Count me in as a budget nerd. I use YNAB because it’s a pretty sexy looking bit of software and I actually look forward to entering expenses into it. It makes me think at the shop – “I don’t want to buy this because I don’t want to put it in YNAB”.

    I reckon this is where having a larger emergency fund is crucial to get you through the lean months.

    Great post!

    • Glad I am not alone James! 🙂 I’ve not heard of YNAB, but I can relate to not wanting to actually have to record expenses I view as useless. Having a larger E-Fund is definitely crucial before going down this path.

  3. I had never realized that it was actually one of my excuses for not budgeting. Money comes in, I need to eat, no money, still need to eat is my budget. What I used to do is if I need $1000 for basics and have $10000 in the bank, I know I have money for 10 months and can reassess in 10 months with the money I made from freelancing. Now I know I should look back instead and determine my average income. Thanks for the tips John.

    • You’d be amazed at the people who use it as an excuse Pauline. That said, it is an easy one to make…especially if you’re new to it. Great point on looking back Pauline, that can be very helpful in budgeting when you don’t know exactly what you’re making from month to month.

  4. This is something that we’ve been thinking about a lot. Now that he works a sales job, his pay fluctuates greatly.

  5. Another good post! Our incomes are regular now but when I go back to work my pay does fluctuate slightly as I am paid by the hour and depending on my patients it varies. What we plan on doing is living on a budget that is based on the LOWEST I would possibly make and if/when I get paid more we shift it to savings as if we never knew it was coming!

  6. I’m the total opposite. Budgets are just something that don’t work for me. I’ve had wildly irregular income for 15+ years and it’s just not something that either interests me nor can I make work.

    • I can understand that feeling. Budgeting can be difficult, but it does not have to be. I would encourage you to find something simple that works for you. In the end, the important thing is living within your means and having your money work for you, which I believe is easier done with a budget.

  7. The most important thing I have found with budgeting is recording ALL your expenses. The sooner you start doing this, the better. Irregular expenses can really throw your budget for a loop (like buying a house!) as I have seen in the past few months. I also really agree with your tip to prioritize expenses. I don’t have irregular income, but if I did freelance full-time I can imagine how you really need to see what expenses should be paid first and what can wait (if needed).

    • I could not agree more DC. Knowing your expenses and what they’re for is key. If you don’t, I think it’s just like trying to go through darkness without a flashlight. You need it to know where you’re going, otherwise you’ll just end up going in circles if not worse.

  8. Like James and John, we are also budget nerds:) I’d rather be nerdy than broke! Great tips!

  9. Good post John. I can’t say that I like budgeting, but I understand the need for it. I am actually very good at knowing my budget numbers in my head and translating them throughout the month. It is a little number gift that I have picked up through the years. Many people ask me how I do it, but I have no idea. I still keep my budget on paper though, just in case I have a little brain fart.

    • Thanks Grayson. I am pretty good with numbers myself and I can usually rattle off what a certain number is on our budget. I would say I am a bit on the nerdy side & liking to see the numbers on paper…well Excel. As long as you’re within your means then that’s the important thing in my opinion.

  10. I have my regular job, and I don’t factor in the $$ from blogging or my second job. Works out better that way for me at least-good tips!

  11. Mandy - Money Master Mom

    Some great advice. I think it’s important that when you have extra you portion it between fun and saving. Walking too straight a path is difficult to maintain, and leads to HUGE splurges when you can’t take it anymore. Small indulgences keep you on the right track and satisfied.

    • Thanks Mandy! Thanks also for bringing that up, I failed to mention it in my post. I am a big proponent of small splurges when you’re able to. That can go a long way to not making you feel like life is to laborious or stingy because you might not have a lot of money. Life has to be fun, otherwise, what’s the point? 🙂

  12. Great post John, I would forward this to anyone who is self-employed. I share some of your experiences and couldn’t agree more that saving the extra money is so critical when you work for yourself. Not that we can’t trust ourselves to bring in continuous income, but sometimes things get out of our hands and emergency savings are great at keeping us cool while restoring the earning balance.

  13. “Give your budget time to work” is where I struggle. I create the budget but then don’t stick to it for various reasons. Most often because I’m not giving it enough time. I just recently started with one again and this time focusing on sticking with it.

  14. Great post, John. I did one similar a few months back on how I budget with an irregular income. The biggest challenge for most people is they don’t know how much they need coming in each month. For me, I know specifically how much I MUST pay myself to cover our bills, and if I bring in anything beyond that then I save it for when I have a bad month.

  15. Thanks Jason! I would agree that that is the biggest challenge that most people in our situation face. I know down to the dollar what we need and anything else beyond that is used for savings, covering things we may not have been able to cover the previous few months and a little fun.

  16. We’ve only been budgeting for the past 11 months and it has made a lot of difference but it hasn’t always been easy to follow. My husbands freelance income fluctuates a few hundred dollars each month so that makes it harder. And we have decided to put all of my freelance income into our savings account for now, which is quite a nice change for us.

    • Good for you and your husband getting on the budgeting track Sicorra! I can relate that having those swings can make it harder to live by a budget. Putting your freelance income in savings is a great way to help supplement that variance.

  17. Great advice! The hardest thing to do is prioritize what needs to be paid first, second, third, etc. I would like to add for someone who is extremely tight with their money because of irregular income: find out the grace period for each bill you pay including debt and call to find out if you can change due dates. This can work in your favor.

    • Thanks Ornella! I agree that the prioritizing can be very difficult to do, especially if you’ve never lived on a budget before. That’s a great point about finding out the grace periods, it definitely can work out for you in certain situations.

  18. Great post John. I too have an irregular income, luckily my wife has a steady paycheck. It can be taxing at times to know when to spend and when to save. Saving money during good times is the best tip you can follow when living off of fluctuating income. That way you have something for when the slow times arrive.
    I also keep an mini emergency fund in our checking account. At the end of every month I make sure that I have 1/2 of our monthly expenses in the account incase the month turns out to be really bad.

    • Thanks Justin! That’s great your wife’s paycheck can help balance your fluctuating income. It can be diffiult to know when and how much to save. The first temptation can be to spend it or throw it at something else, but saving really is a much needed discipline in these situations.

  19. Oh yeah, I’ve lived the irregular income lifestyle – NOT fun.

    It’s SO important to have a big buffer, and to budget based on minimum expected pay.

  20. I wish I had read this a year ago!!
    I was the Director of Sales at an organization in TX, and although I wasn’t getting rich, I was making a good salary. Then I left and started doing independent copy-writing. It was hard to transition to my former budgeting (which was low-pressure) to budgeting with irregular income. I think it was sometimes so difficult I unwisely didn’t worry about.

    • That can be a tough transition to make. My wife and I have done it a couple of times and finally feel like we have a good footing under us. I think a big key is being rational about the situation and make wise decisions based off of that.

  21. I haven’t had a regular income the entire time I’ve been married. Similar to what eemusings wrote, I think the key is to know what your line in the sand is.

    When I was working seasonally, almost my entire paychecks would go into savings to pay for the other half of the year when I was out of work.

    • I totally agree Edward. Knowing that line is essential to have and you make decisions around that. The advantage of knowing it is that it can help you know where you stand and how you need to act if you get close to it.

  22. Having irregular income, I just made a barebones budget and anything extra I get mostly stays in my bank account, to make up for some lower income months. Great post!

  23. I definitely can relate to having irregular income. Working in a restaurant and having most of my money come in as cash tips can be hard to measure a monthly income. If I cut down a shift during the week or take off a weekend to travel, roughly estimating an income can lack accuracy. I used to not count the money coming in and pay in cash, which is hard to track. Now I always make cash deposits and track how much is coming in and going out per week.

  24. Great post John,
    Knowing your numbers if the most important step if not one of the first ones I suggest. You need to know what you owe and how much you spend.Factoring in the expenses even the ones that are once a year are very importatnt becaus if you don’t have the money you will have to pull it from somewhere. Sometimes I say if you know what you made the year before or even 6 months earlier it will help you to gauge some form of a budget. Budgeting takes practice and we learn from our errors. Magic won’t happen over night like you say give it time and you will find what works for you. Mr.CBB

  25. Great tips. My wife and I are normally very strict about our budgeting, but I recently switched jobs and it’s been very hard to keep track of things. We’re really glad I found this post!

Leave a Reply

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.