Three top tips to manage money on an irregular income

Budgeting is a vital part of our financial wellbeing – it helps us to save more, be mindful of our spending, stick to our goals and most importantly live within our means. 

Whether you are self-employed, freelance, or doing shift work, inconsistencies in what you make every month can make budgeting tough. 

Questions such as: “how do I know what to budget when I don’t know how much I am getting in for the month” or “what happens if my income changes all the time?” circulate in your brain and cause you to procrastinate on any budgeting action. 

Planning your spending on an irregular income can be tough but it doesn’t need to be. So here are my top 3 tips to help you get started: 

1. Create a financial buffer (before you get started)

If you are about to go self-employed or freelance, try your best to save up 3 months worth of money for your expenses (living costs) so you are always ahead of the game. And if 3 months is too much, 1 month will still be a great help in keeping you ahead of the curve. 

It stops you from always chasing your tail and living month to month. If you always have one month’s worth of living costs in your bills account, the stress about paying your bills will lessen, leaving you with more mental space to bring in the money! 

2. Work out an average of what you make each month

If you have been freelance for a while, you can go back over months (or even years) worth of income and look at what the average is to give you an idea on what you make. 

E.g. if you look back throughout all of 2022, and you write down how much you made per each month. You add it all together and then you divide it by 12 months, this will give you the average monthly income you made over that time period. 

You can also look to see, across those months, what was the lower income you made in one month and you could base your budget on the ‘lowest possible value’ to be safe.

3. Use separate pots for different purposes

Having separate accounts for different uses can be so good for your brain. You could have one pot for all of your income. Then you have separate accounts for our bills and fixed expenses e.g. rent, mortgage, internet, utility bills etc. Another account for your monthly spending (outside of your bills) so groceries, travel, eating out. And finally a separate pot for savings. 

Seeing it all broken down like this allows you to ensure you have all the right money in the right places. You can choose to build this up monthly or weekly and you never need to worry you have accidentally spent your bills money on a night out!

Remember everyone is different and budgeting is all about trial and error. Get started, reflect and refine each month. And find a way that works for you!

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