How to Budget Your Income When It Fluctuates

How to budget your income

If you have an irregular income, you may feel that budgeting isn’t an option for you, but the truth is that when you have an irregular income, a budget is the best thing you could have. It may sound impossible, but you can make a budget even when you have no idea what you’ll be earning from week to week. Here’s how to budget your income when it’s an irregular one.

Know your necessities

To budget your income, you need to know what your necessary expenses are before you know anything else. What has to be paid for your basic survival needs to be met? This list will probably include things like your rent or mortgage payments, car payments, groceries, and utilities.

Add your “extras”

After you’ve accounted for your basic needs, figure out how much you need to set aside for things like entertainment, eating out, hobbies, and other expenses that aren’t necessary but that you want to do or have. This list is flexible, so you can spend more or less in this category from paycheck to paycheck if you need to.

If you aren’t sure exactly how to budget your income for these expenses, try the 50/30/20 plan. This means you allocate 50 percent of your income to necessities, 30 percent to “extras”, and put 20 percent into a savings account.

Make sure you set aside savings

Savings are crucial to having a successful budget on an irregular income. Your savings safety net will keep you afloat during those months when your income dips low, so make sure you are saving as much as you can.

It’s a good idea to deposit every penny you earn into your savings account, then transfer out only what you need to pay for your necessary and “extra” expenses. Anything left over stays in the savings account and builds up so you’ll have it when you need it.

Get regular with income and expenses

By transferring only what you need to your checking account each month, you’ll see a pattern of “regular” spending. If you notice that you’re using most of your savings to pay your bills, you can reduce some of your “extras” so that you can keep more in your savings account. You can think of the money you “pay yourself” as regular income, because once it’s fine-tuned, it shouldn’t fluctuate much at all.


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