How To Successfully Budget With An Inconsistent Income


On a less traditional career trajectory, like freelancing, subcontracting or consulting? There are definitely pros to paving a unique path. Who doesn’t want to be their own boss or have flexible hours? But when the pay is inconsistent, how are you supposed to budget accordingly? We got you. Here’s how to make sure you’ve got enough in the bank to take a breather, even if your work is yo-yoing.

Step 1: Estimate the lowest possible income you could make in a month.

Before you budget anything, you need to know how low your income could be on a monthly basis. If your income has been inconsistent for at least a few months, take a look at your least profitable month and write down the amount you made. If you’re just starting out, estimate your lowest potential monthly paycheck. Whatever number you come up with is your new monthly budget, even during the months when you make more than you expect.

Step 2: Make a list of all your bills and necessary monthly purchases, and then compare it with a list of all your current monthly payments.

When making this list, be extremely honest with yourself about what you consider to be “necessary.” We’re talking about costs that will allow you to live, like your electric bill, groceries and health care coverage. Write them down on the left side of a sheet of paper. Then, on the right side of the sheet, write down every monthly bill and recurring purchase, including what you already wrote on the left. The right side of the page should include that Netflix subscription, boutique fitness class and money you spent going out and on Seamless. Compare the lists. Do you see any items on the right that you could cut out? Circle them and remember them for particularly difficult months. If you need help reading your transactions or figuring out how you spend, consult a free budget app.


Step 3: Based on your lowest monthly estimate, create the budget and allocate amounts of money to your necessary and select unnecessary costs.

You know what you need to spend your money on, and you know what you want to spend your money on. Now, connect the dots by actually assigning each bill or purchase with the exact amount of money you want to pay each month. Some bills will vary, like gas and electric, so estimate high. After you allocate your money, you’ll know how much is left. Break up that amount — half should go into savings and half can be your fun money.

Step 4: Adjust when necessary.

Hey, sometimes you’ll experience a really unsuccessful month. In this case, cut off some unnecessary purchases (the ones you circled on your list) and pull from savings. In the best case scenario, you will have had a few really successful months and are able to save a significant amount of money to bail you out when these bad months occur. Having a great month? Set aside a small portion of the money you’d normally send right to savings for yourself. After all, everyone needs a break and deserves to have some fun.

As you can probably gather, it’s all about balance when you have an inconsistent income from month to month. Make a plan, overestimate how much you’ll spend and underestimate how much you’ll save. Not only will you keep your head above water, but you’ll be able to save some money, too. Good luck, you free spirit.