Budgeting for an Inconsistent Income | Cleveland Bradley County Teachers Federal Credit Union

Creating a budget doesn’t have to be a challenging endeavor, and it can help keep your finances on track while preventing overspending. However, creating a budget when your income varies can leave you with a lot of questions.

Do I have to redo my budget every single month? Should I create a separate budget for big expenses versus regular household costs? Should I become one of those extreme couponers WHO have closets full of canned items?

There is never anything wrong with stocking up when you catch a good deal, but you don’t have to get rid of all your clothes to make room for non perishables. You can create a solid budget even when your income fluctuates a bit.

Start With the Regular

There are lots of us with income that varies from week to week or month to month—it’s pretty common for teachers to pick up a side gig during the summer, for example. When you are in this situation, it can feel like the best solution is to operate paycheck to paycheck, paying what you can each month and holding out for the rest. This method can leave you in a lot of trouble, though, and it can lead to overspending one month and slipping on bills the next.

In order to create a budget you can stick with, start with your regular monthly expenses. Your income might not be the same each paycheck, but your house bills should have much less fluctuation.

Take a look at what these costs are and subtract those from a typical paycheck. Once you have accounted for these bills, set aside a fixed number to contribute to an emergency fund. Even a few dollars going into savings regularly will add up quickly.

There are lots of different kinds of budgets, but when you are working with shifting income, zero-based budgeting can be ideal. With this method, your goal is to get to zero each pay period, essentially starting over with your next check. That doesn’t give you free rein to spend every dollar you earn, though; instead, it dedicates everything that you earn to prevent over or underspending.

Think Big Picture

Even with a cash-based income or inconsistent pay, it is possible to get an idea of what you are averaging in earnings monthly. Track your income for a 10–12 week period in order to get a bigger picture of what you are bringing home. It may be wise to choose some of your lower paychecks over this span of time in order to best create a budget that will work even in your tougher months.

If your side job doesn’t take taxes out of your pay, set enough aside to cover this anticipated cost. This is a great principle for any large ticket item that may be approaching in the future. Cover yourself now to avoid an unanticipated large payout later.

Flexible income doesn’t mean you can’t plan and prepare for your future. Start a budget, and stick to it. Push yourself to put even a few bucks into savings regularly. You won’t regret taking action and becoming more financially free.

Ready to create the accounts and budget that work best for you? Contact us and get started.