October 26

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How to Manage an Irregular Income


Many people have an irregular income. This might be because you are a freelancer and you can’t be sure how much work you will have each month. People who work to weekly wages may also have fluctuating monthly incomes because of the number of weeks per month. 

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While having an irregular income can make managing your finances more difficult, it doesn’t have to be impossible and there are a few things you can try. Learning to manage an irregular income does take time and practice, especially if you are used to having a consistent income so don’t be too hard on yourself if you don’t get it perfectly right first time. There are still things you can do to even things out. 

Budget Carefully

When you’re earning different amounts each month, it’s really important that you stick to your budget. Freelancers who are unsure of their income must definitely pay attention to what they are spending and make sure they keep their costs down as much as possible. 

When you budget, make sure that you account for putting money into savings as well as your basic needs. If you don’t automatically pay tax through your payslip, you should set the money you would have paid aside so that you can pay it later. 

Related: Apply These 12 Secret Techniques To Drastically Reduce Your Financial Stress

Spread the Cost

Earning different amounts each month means that you need to get used to spreading the cost. A credit card can help here as you can spend as you would normally during a slow month and then repay the following month when the money comes in. Using a 0% credit card is the best move if you can get one, otherwise, try to find the lowest interest rate and build up your credit score.

Putting money into savings in richer months is also a good idea. The easiest way to save with a fluctuating income is to put a particular percentage of every paycheck into savings. Even if you are only saving a few dollars at a time, this method will be painless and doesn’t require a lot of maths! Saving between 10-20% is most often recommended. 

Related: How to Pay Down Your Debt Faster With The Debt Snowball Method

Keep an Emergency Fund

Everyone should have an emergency fund but it is even more important for people with unstable or irregular incomes. Freelancers, in particular, must work on building an emergency fund as this will provide a cushion just in case a client suddenly leaves you or you fall ill and cannot work. With this in mind, you might want to save a little more than the recommended 3 months’ basic income and keep a few more flexible assets too. 

Managing an irregular income is always going to be a challenge. However, as you get used to managing your money, it will get easier to balance and work out how much to save for the next month or when you can relax a little bit. Using a line of credit will really help while you get used to juggling your income and the more you can add to your emergency fund, the more relaxed you will be. 

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