Budgeting isn’t fun for anybody but it’s even more difficult when you’re working with an irregular income. It’s really easy create an organized budget when you know exactly what you’ll have coming in and exactly what day you’ll get it. However, when you’re a freelancer or a business owner you often don’t know when or how much you’ll get paid.

The only difference between regular budgeting and budgeting on an irregular income is that you have to work backwards, which just makes things a little more … fun.

Personally, I think it’s most important for people with irregular incomes to be budgeting because they have the most to plan for. There is always that possibility that one month you’ll make $10,000 and the next you’ll only make $3,000 so you need to be focused and organized.

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Table of Contents

Steps for Budgeting on an Irregular Income

#1 – Figure Out Income

Generally, there are three ways you can choose to calculate the amount of income you’ll be calculating your budget with.

Average income from the last 12 months
Lowest income from the last 12 months
Last month’s income

This is a decision that’s entirely up to you. If it were me, I’d decide to use my average income because it takes both high and low incomes into account and it’s usually a great place to start. Try it out and see what works best for you!

#2 – Figure Out Basic Expenses

When you’re budgeting for an irregular income it’s important to figure out what is actually important to you, and what can be skipped this month if you don’t have the money. This is also known as a bare bones budget which we recently wrote an entire blog post on if you need a bit more clarification.

You need to figure out what your basic monthly expenses are, these usually include:

Rent/Mortgage
Utilities
Food
Transportation
Child Care

These are the things that you literally can not live without. You need to be real with yourself and figure out how much these expenses are, if you over budget in these categories you’re just going to end up making everything more complicated later!

#3 – Figure Out Non-Essential Expenses

Non-essential expenses are the fun part, they’re all the things that you don’t necessarily need to survive. This can include things like eating out, going to the movies, netflix, new clothes, junk food, and so much more. You want to list all of the things that you regularly spend money on.

A great way to figure out what non-essential expenses you need to include when you’re budgeting is to track your expenses for an average month. A month where you aren’t spending a whole bunch of money but also a month where you aren’t spending no money. This way you can see exactly what you’d spend during just a regular ol’ month!

#4 – List Expenses in Order of Importance

Now we need to make a list of all of your expenses in order of importance. This is of course going to have your bare bones budget expenses first before you list any of your non-essential expenses. The reason for doing this is because once you’ve paid all of your non-negotiable expenses for the month, you can move down the list of non-essential expenses paying each in order of importance until you essentially run out of money!

For an example, this would be your bare bones budget expenses:

Mortgage
Utilities
Groceries
Car Payment
Gas
Child Care

Then you would list your non-essential expenses in order of importance (this would obviously be different to every person):

Netflix
Movie Dates
Dinner Out
New Clothes
Gym Memberships
New Make Up
Etc.

One really important thing that people need to realize is that saving money is THE MOST important when you’re working with an irregular income. After you pay your essential expenses you should definitely think about saving a certain percentage or amount of what’s left. It’s recommended that regular people have 3-6 months of expenses on hand, but I think for irregular income if you can build it up higher, it’s going to work in your favour.

What To Do When It Doesn’t Cover It?

This is one of the scariest things that can happen to a freelance worker or someone with an irregular income. Sometimes we just can’t make ends meet. One of the best things you can have set up if you’re struggling on an irregular income is an emergency fund. You can set your emergency fund up when you’re having a really good month and have it help you through the months that are a lot harder.

If you’re finding that you can’t ever seem to make it work, there are two things you can do. Obviously, the first one is to cut your budget down further which may already be difficult if you can’t even cover your bare bones budget expenses. On the other hand, you can increase your income through other kinds of freelancing or side hustling. We have an entire page with our best freelance and side hustle ideas on this blog which you can find here!

Bonus Tips for Irregular Incomes

Irregular incomes aren’t fun, budgeting is really hard, but I’ve got a couple more tips for you to make it work really well for you. The first tip is to make sure you’re updating your budget literally all the time. And I mean ALL the time. You need to make sure you have a new budget every month for sure and maybe even have a bi-weekly budget shift if you need to.

Make sure you’re budgeting with actual numbers not just numbers that you pull out of your butt. Once you get paid, budget it right away before you spend a penny.

And finally, keep it simple. Don’t overcomplicate things. A great budget option for you would be the zero-based budget because it’s the simplest and most straightforward budget method out there!

Final Thoughts

If you’re currently working with an irregular income and struggling to figure out your money situation, I feel ya! I’m doing the exact same thing right along with you. Remember you can always contact me using our contact form and I’ll try and help you through the process!

Thanks for reading,

xo Taylor!