6 Steps to Help You Budget with Variable Income

One benefit of being a 9-5 employee is getting a steady paycheck. Knowing how much income you’ll have in the bank every month makes it much easier to budget, save, and have a smooth financial life.

But what if you don’t have a regular job or your position comes with unpredictable income? Many people are self-employed or work on commission and have no clue how much they’ll earn from month to month.

For instance, solopreneurs and small business owners may not know exactly how much revenue they’ll bill or the total amount of receivables they’ll collect. Salespeople can have rollercoaster commissions that fluctuate wildly from month to month or quarter to quarter.

No matter why you may be dealing with uncertain income, it is possible to create a money system that works. In this post, I’ll cover strategies and steps to budget and manage money the best way possible when you have variable, irregular, or unpredictable income.

6 Steps to Budget with Variable, Irregular, or Unpredictable Income

1. Have a vision for your financial future
2. Know your spending baseline
3. Add your financial goals
4. Identify your discretionary expenses
5. Create an ultra-conservative budget
6. Set up a holding account

Here's the detail to follow for each of these steps.

1. Have a vision for your financial future.

No matter what you call your money system, such as a budget or a spending plan, it should be based on what you want to achieve with your money. Your income allows you to pay living expenses, but don’t forget that it also must fund your long-term dreams and create financial security.

No matter if you want to retire a multi-millionaire, buy a beach house, or be debt-free before a certain birthday, incorporate it into your money system. Time passes quickly, so if you’re not making steady progress toward your goals, they aren’t likely to happen.

To get started, download the free Financial Planning Workbook (PDF) and set aside at least 30 minutes to complete it. If you have a spouse or partner who shares your financial life or goals, review the workbook together. It will prompt you to ask yourself important questions and to answer them as thoughtfully as possible.

If you’re not sure what your financial vision is or should be, here are some ideas to get you started:

• Maintain a minimum of $1,000 in an emergency fund
• ...

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