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Budgeting with Irregular Income

Developing a budget is a task many find challenging, even when they have a regular, predictable income stream. But what if your income is inconsistent?

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Updated:

April 22, 2025

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Small business owners, farmers, salespeople, musicians, waitstaff, and many others who rely on commissions, tips, or the availability of work can fall into this category. For people in these professions, it can be challenging to know how much money is coming in on any given week. Sometimes, it might feel like feast or famine. This situation is common: almost one-quarter of U.S. consumers report that their income changes "somewhat" or "a lot" from month to month (CFPB, 2020). But, having a variable or unpredictable income can pose challenges. Research shows that those with variable income are more likely to face difficulty paying a bill or expense than those with a stable or consistent income (CFPB, 2020).

If you have irregular income and sometimes struggle to develop or adhere to a budget, you are not alone. However, with some careful planning, you can meet your financial obligations and maybe even begin to build a cushion for yourself.

Start with Fixed Expenses

Knowing your fixed expenses is vital to balancing your budget from week to week. Start by listing those things you must pay each month. Consider the following:

mortgage or rent
utilities (phone, electricity, water, internet, etc.)
childcare
car loan
credit card payments
insurances (health, home, auto)
food
medicine
pet care
transportation (gas, parking fees, bus pass)
anything else that is a non-negotiable expense

Having an emergency fund included in your fixed expenses can significantly strengthen your financial situation (CFPB, 2022). Long-term goals may include saving for higher education or retirement. Emergency funds allow you to cover your critical expenses in the event of job loss, a health issue, or another unexpected event. It is generally recommended that you save at least one to three months of your average monthly salary in a high-yield savings account for such emergencies. You may also consider putting money aside for periodic expenses such as car repairs, holidays, and vacations. But make sure that your savings goals are realistic so that you can consistently pay your fixed expenses.

Consider Flexible Expenses

Next comes flexible expenses. These are expenses that may not be required every month or have a specific amount attached to them. Such expenses include:

membership/subscription services
entertainment
household items
clothing
personal care
eating away from home
home or auto maintenance

While flexible expenses may be important to you, they remain expenses to which you have the discretion to allocate money. If you cannot meet your flexible expenses in one month, creative strategies such as making payment arrangements, shopping for bargains, or attending free events may allow you to acquire what you need.

Know Your Income

Once you know where you need your money to go, the next step is to estimate your expected monthly income. For people who don't have a reliable weekly income, this may be difficult to do with precision.

One strategy is to look at the past six months of your income. You can use your lowest monthly income over the past six months as your anticipated income. This would be a conservative estimate of what your monthly income is likely to be. Alternatively, you might use the average of your last six months' income as your anticipated income (Nelson-Bell, 2021).

Remember to use net income (your take-home pay after taxes and deductions) when determining your lowest or average monthly income. For example, if your net weekly pay varies from $800 to $1000, and you wanted to use a conservative estimate, you would use $3200 ($800 times four weeks) as your anticipated monthly income.

Calculate Your Final Budget

Finally, use the following equation to see where you stand financially:

(Net monthly income - fixed monthly expenses = $ left for flexible expenses)

Your income should cover your fixed expenses and allow you to allocate money to the flexible expenses, such as entertainment, household items, or clothing. If it doesn't, look for ways to readjust your fixed expenses until you have met your obligations. Use the money from higher-income weeks or bonuses as a buffer for those weeks when there is less income for flexible expenses or to save for emergencies.

Another strategy to accommodate for an unpredictable income is to prioritize your spending. With an irregular or unpredictable income, setting priorities helps ensure that fixed expenses are covered before money is allocated to flexible items. Maybe entertainment and clothing are lower-priority budget items for you. Some weeks, you may have less money available, and you may opt to entertain at home with friends or shop at a thrift store for an outfit. During these weeks, you might also seek free events or wait until you have the available income. You may also be able to make some fixed expenses flexible to allow for greater leeway during lower-income weeks or months. If, for example, you belong to a gym with a contract, the monthly membership fee is a fixed expense. However, if you join a gym where you can pay as you go, this becomes a flexible expense. You will have lower expenses during warmer months when you can participate in outdoor activities like cycling, tennis, or running.

Track Your Money

Once you have determined your budget, financial experts encourage people (but especially those with variable incomes) to track where their money goes. It is often the little "money leaks" that cause us to have less money in our pockets than we thought we had. Trips to the convenience store, impulse purchases, and eating meals away from home are examples of how our finances can quickly be drained if we do not monitor our spending.

Consider an experiment. For one month, record where you spend your money and see what you discover. You might be surprised at what you find. That $3 cup of coffee on the way to work adds up to about $60 monthly. Just making coffee at home or treating yourself only once a month can save you over $600 per year. Not a bad trade-off!

Seek Our Free Professional Help

Many banks and credit unions have tools and apps for helping people create budgets and manage their money. Penn State Extension has a resource, The Build-a-Budget Book, which guides people through all the steps of building a sound financial plan.

The Consumer Financial Protection Bureau also has a toolkit available to help people achieve their financial goals. Download or order print copies at no cost.

Whether your income is predictable or not, a key element of a sound relationship with money is that spending is controlled and does not exceed income. It is always a good idea to have a budget that you review regularly and update as circumstances change. Keep in mind that maintaining a budget is not meant to be a restrictive activity, but rather a strategy for making sure you are on your way to reaching your financial goals.