top of page

How Do You Manage Your Money When Your Income Is Irregular?

Updated: Dec 26, 2022

How do you manage your finances when you have irregular income?

With the current level of global uncertainty, I am sure many people worldwide are living this way. If that was stressful enough, what if you don’t even have a paycheck you can count on?

One of the main reasons people stick with their 9 to 5 jobs is financial security, no matter how soul-sucking. The pay is predictable, and you can take a few days off sick without impacting your income. In some cases, inconsistent performance at work may not affect your salary unless you were underperforming for an extended period.

Welcome to the world of freelancing.

Freelancing is Different

It’s a very different scenario when you’re freelancing or running your own business, where income is neither consistent nor guaranteed. As more people move towards freelancing and entrepreneurship, your budget needs to be as flexible as your revenue.

People with fluctuating incomes should focus on four financial themes: budgeting, preparing for emergencies, taxes, and saving for long-term financial goals.

Budget Conservatively

Keep your business goals ambitious but your budget conservative.

When you work for yourself, you should decide how much you need to earn each month to afford your expenses, meet debt obligations, and save for the future.

Take the average six months’ income and create a budget around that figure. Add up your essential expenses and make this the minimum you need to live. At the beginning stages of your business, this amount could be equivalent to your monthly revenue goal. Increase this goal as your business grows.


Rather than focusing on exact amounts, create a budget around percentages. Set aside fifty percent for necessities, thirty percent for lifestyle, and twenty percent for saving/investing.

Setting a realistic budget can provide you with structure and consistency with your money despite your fluctuating income.

Prepare for Emergencies

To deal with financial uncertainties such as late payments from clients, or medical emergencies, you must save three to six months of living expenses. That amount can be challenging to achieve when your pay is volatile.

But because you don’t know when your next paycheck is coming, you must save as much as possible when earning something. Work towards building at least a few months of savings to prepare for dry spells. A solid amount of savings can smoothen the inconsistencies in your income. And you can be more selective about the types of work you accept.

Plan for Taxes

When you’re employed, your employer is responsible for withholding your taxes. The fact that this money never even shows up in your bank account makes the entire process of not spending it easy.

However, if you’re self-employed, you must be disciplined about setting aside a portion of your income for upcoming taxes. Track all your expenses to deduct the most but remember to save around 30 percent of your revenue to pay taxes.

Be sure to charge your clients an amount that considers the taxes you will eventually have to pay for your work. Getting paid $1,000 for a project does not mean you can keep all of it. You will have to pay taxes on that $1,000, leaving you with less than you thought you’d get. Consider charging $1,200 for that same project to take into account taxes.

Plan For Your Long-term Goals

Because your income fluctuates, you may find it challenging to set and achieve long-term financial goals such as saving for a child’s education or planning retirement.

One of the most significant benefits of working for an employer is that you can elect to be part of a pension program. In most places, this is mandatory. However, if you’re self-employed, you don’t have the luxury of a pension plan.

No matter how much you enjoy your work, the chances are that you may want to retire at some point. You must save for long-term goals. It could be to pay off the mortgage or retire comfortably.

Create Multiple Income Streams

You must create multiple revenue streams instead of relying on one source of income. If you are a freelance writer, consider making digital products such as ebooks and webinars. Promote them on your website. Invest in dividend-paying stocks. The more sources of revenue you have, the more diversified you are.

Bringing It All Together

There are countless benefits to freelancing, such as the freedom and flexibility to do what we want when we want. But your revenue is not consistent. At least not initially.

It takes discipline and intention to create a system to manage your finances consistently, even if your income is not. You don’t want financial problems while chasing your dream job!

Recent Posts

See All


bottom of page