How to successfully budget with inconsistent income.

Inconsistent income is something many are faced with due to their type of employment. Jobs that are paid hourly, commission based, self-employment, etc., are all subject to income that may fluctuate every pay cheque. Due to the inconsistent income, budgeting may feel impossible because you don’t have a set monthly income, but it is possible to create a budget that helps you feel in control of your finances. Having success budgeting for inconsistent income requires more of an effort than budgeting for consistent income, but finding what works for you is key. Below are some steps that could be integrated into your budgeting to help you achieve your goals and stay on financial track

 
1. Create an essential budget – Create a budget that covers the basic necessities such as house, utilities, groceries, and transportation. By prioritizing your necessities, you can ensure you basic needs are met, even during low-income periods. 

2. Use a zero-based budgeting plan – Zero-based budgeting is a budgeting method where you plan how every dollar is used. This will give you better insights into your finances by requiring the budget to be updated on a regular basis to accommodate the changing income. 

3. Flexible spending categories – Within your list of expenses, separate the ones that can be adjusted. This could be entertainment, dining out, and other discretionary expenses. If you find yourself in a low-income period, these expense categories can be an area that one could pull funds from to cover the basic necessities. 

4. Create a separate emergency fund – Having a separate emergency fund set up to help cover essentials will help prevent any financial stress during those low-income periods. The amount that should be saved is dependant upon the average income and expenses. If your expenses are minimal, you may not need as much as people who have higher monthly expenses. During your high-income periods, ensure you are keeping your emergency fund topped up to act as a buffer for lower income months.

 
5. Don’t overspend during high times – When you receive a decent paycheque, especially if unexpected, it’s easy to get carried away and taking advantage of having more disposable income than normal. Take advantage of the extra funds and top up your emergency fund and pay down any debt that may have been accrued during low-income periods.

6. Plan for irregular expenses – Identify any irregular expenses that you know you will be faced with throughout the year, such as yearly insurance, annual subscriptions, income taxes, home maintenance, etc. Have a separate savings account and use your larger pay cheques to fund those future irregular expenses. 

Adapting to inconsistent income requires being flexible, planning ahead, prioritizing needs over wants, and staying on top of your spending. By taking advantage of the steps above you should be able to develop a budget that accommodates the fluctuations in your income. 

If debt is hold you back from successfully budgeting with inconsistent income, there are options.  

If you are looking for advice, or a second opinion about your debt, it does not cost anything to talk about your options. Every financial situation is unique and viable options can differ from person to person. A conversation free of judgment and cost, is the first step to determine options for debt that make sense for you. For a free consultation, please call or text (506) 645-1814 or email jaime@tackledebt.ca; or visit www.tackledebt.ca.