How to Budget: Irregular Income

To those who are on my email list, I’m sorry about the weird post you probably received. I hit the incorrect button and you got a paragraph. I’m so sorry about that!

What I meant to do is continue the “How to Budget” series by moving from Why we budget and How to set up a budget (part 1 and part 2) to how to handle irregular income.

How should one handle irregular income when setting up a budget?

How should one handle irregular income when setting up a budget?

I also need to state once again that I am not a certified financial planner, accountant, or investing professional. I am a mother who learned personal finance from the “School of Hard Knocks” and is willing to share what she’s learned in the spirit of chatting with a friend over coffee. If you require professional advice, please seek it from someone with the appropriate certification.

If you’ve been following along and you actually worked out the steps from the Why article and both How articles, this will be an easy thing. Remember how, way back at the beginning in the Why article, we listed priorities? Then in the How articles we listed our budget items in priority order and planned them out on the calendar? If you’ve done that, you may have already figured out what to do with irregular income.

If your income is irregular then you don’t know how much you’re getting and when. But if you have your calendar and priorities listed, you do know where the money needs to go when it comes. So when the money arrives, pay your bills in priority order. This may include assigning priority based upon urgency. Once the main priorities are met you’ll need to look at the upcoming bills and estimate what you’ll need until you might have more income. Only after the needs are met should money be allocated to lower priority spending.

If your income is very infrequent or seasonal then one of your priorities should be building an emergency fund. That way you’ll have money available for the off season or the long spells between paychecks. While the traditional advice has been to have an emergency fund set aside that could cover your expenses for 3-6 months, those with irregular income should consider saving more, even up to a full year of reserve income.

Even if you have a regular paycheck, building an emergency fund to cover of 3-6 months’ worth of expenses should be your first priority once you are out of debt. If you’re still getting out of debt, keeping a small emergency fund of $1,000 – $2,000 will allow you to cover the little emergencies like car repairs or replacing appliances without going into additional debt.

How should one handle irregular income when setting up a budget?

How should one handle irregular income when setting up a budget?

Do you have irregular income? How do you handle it in your budget?

The “How to Budget” series posts are:

  1. How to Budget: Why?
  2. How to Budget: How – Part 1
  3. How to Budget: How – Part 2
  4. How to Budget: Irregular Income
  5. How to Budget: Emergency Fund
  6. How to Budget: Getting Out of Debt

Update: This post’s pin was shared at Bloggers Spotlight #16.

I moderate comments manually but will get them posted as quickly as possible. Please keep your comments kind and if you must disagree please do so without being disagreeable. Rude or inappropriate comments will obviously not be published.

5 responses to “How to Budget: Irregular Income

  1. Pingback: How to Budget: Why? | A Chat Over Coffee·

  2. Pingback: How to Budget: How – Part 1 | A Chat Over Coffee·

  3. Pingback: How to Budget: How – Part 2 | A Chat Over Coffee·

  4. Pingback: How to Budget: Emergency Fund | A Chat Over Coffee·

  5. Pingback: How to Budget: Getting Out of Debt | A Chat Over Coffee·

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