Money Saving Mom®

Every Thursday in 2025, I’ll be answering a question on money and/or budgeting. If you have a question you’d love for me to answer in an upcoming post, please submit it here.

Today’s question is about how to budget when you have a variable income:

“I work as a para at a school so my income is never consistent. I don’t get paid for holidays, school breaks, or summer. How do I make a budget work when I have inconsistent income?” -Anita

This is such a great question — and one I hear often. I’ve found that many people assume budgeting only works if you have a steady paycheck that is the same amount every week or every other week.

We’ve Always Had Inconsistent Income

Let me encourage you: we’ve never had consistent income. When we were first married, I worked as a waitress and Jesse worked a part-time job. I never knew exactly how much I would work, how many customers would come in, and what kind of tips they would leave. We were trying to save every penny we could for the coming few years that Jesse would be in law school, so lived on as little as we could manage and saved the rest. A budget was key in making this happen.

After Jesse started law school, we held a few different jobs over those years — all part-time and almost all that had varying hours and opportunities. I also started a few online businesses during this time and began to learn how to make money blogging. Some months we made more, some months much less. We were barely eeking by many months, but we still stuck meticulously to a budget.

Fast forward years later, and since MoneySavingMom.com is now our full-time income, we still have very varying income. We work with many different brands and companies and some months there are a lot of opportunities and some months there are a lot fewer. We know generally what months will be lower throughout the year, but there are usually some surprises and some things we think will do well that don’t pan out. Again, a budget is what allows us to be able to survive the ups and downs and volatility of running your own business in the age of the constantly-changing online world.

How Do You Stick With a Budget When Your Income Varies?

How have we stuck with a budget all these 22 years of our marriage with so many different jobs and income changes and upheaval and lack of steady income? This is what has worked for us and what I would highly recommend if you have variable income:

1. Build Your Budget on Your Lowest Month’s Income

The foundational principle of managing an inconsistent income is to budget based on the lowest amount you expect to make in a month. Start by reviewing your past paychecks and identifying the month where you earned the least. That’s the number you’ll use as your baseline. If your lowest earning month is $1,500, build your budget around that amount.

This ensures that your basic expenses — like rent or mortgage, utilities, groceries, and transportation — are always covered. Treat any income above that baseline as a bonus, and put it to work strategically (we’ll talk about that more in a moment!).

If you have an income where you sometimes don’t make anything at all in a month (such as if you are in a commission-only job or, like Anita, you don’t earn any income during the summer or holidays), I recommend that you look at your past few years as a whole. How much have you made over the course of the year the past few years? Is it pretty guaranteed that you will make that same amount this coming year?

Take that number and then reduce it by 20-30% and divide it by 12. That’s the amount you are going to have as your monthly budget. (The reason I have you shave 20-30% off of it is because I want you to plan to budget for less than you think you’ll actually make. This way, it provides instant wiggle room and less stress. Also, I think it’s a valuable practice to not plan to spend every penny you make on basic expenses.)

2. Consult Your Budget, Not Your Checking Account

Change your mindset from looking at what you have in your account as “money to spend” and instead consult your budget to see what it says you actually have to spend in each account. This shift right here could just change your life! (Need help setting up a budget? Download our free money tracker worksheets!)

If this is a struggle for you, when your paycheck hits your account, don’t let it sit in your main checking account. Instead, deposit it into a separate holding account or a “income account.” From there, transfer only the amount you need to cover your budgeted expenses for that month. This creates a sense of consistency, even if your income fluctuates.

This system allows you to think of your income in terms of monthly budgets rather than individual paychecks. It also helps you avoid the temptation to spend any extra income impulsively.

3. Make Short-Term Sacrifices to Build an Emergency Fund

One of the best things you can do for yourself when you have an inconsistent income is to create a buffer. Start with a goal of saving one month’s worth of expenses. Once you hit that goal, aim for three months and then six months.

This emergency fund is your safety net for months when your income is lower or when unexpected expenses pop up. To build this fund, use any extra income from higher-earning months and set it aside in a high-yield savings account. Treat it like a bill. Pay your emergency fund bill first.

And yes, it might mean that for six months or even a few years, you have a super, super tight budget in order to free up wiggle room to sock away into savings. Think of this as short-term sacrifices that are going to lead to long-term benefits.

To free up breathing room in your budget to save for your emergency fund, look at your current budget and ask, “Is there anything here that I could live without/do without/forego for a short time?” Ask friends and mentors to look at your budget and help you identify any areas you might be able to reduce, as well. Sometimes fresh outside eyes can give new perspective.

If you genuinely cannot reduce anything at all, then I would encourage you to consider what you could do to make some income on the side in the next 6 months to a year. Could you take on extra hours at work or take on a small part-time job in the afternoons and evenings? What about asking your friends or co-workers if they have any projects or small jobs you could do for them to earn some extra income? Other ideas: pet-sitting, babysitting, tutoring, dog-walking, Uber, Doordash, contract work on Upwork or Fiverr, selling items on Facebook Marketplace, or working as a virtual assistant.

(Note: In The One-Hour Budget, I have a bonus with 50 ways to increase your income.)

4. Create Sinking Funds for Predictable Expenses

A sinking fund is a savings account you use for predictable but irregular expenses, like car repairs, holiday gifts, or back-to-school shopping. By setting aside a small amount each month for these expenses, you’ll avoid the stress of scrambling to cover them when they arise.

For example, if you know you’ll need $600 for holiday gifts, start saving $50 a month in January. When December rolls around, you’ll already have the money set aside and won’t have to dip into your regular budget or use a credit card.

I outline exactly how to do this in my post on How to Budget for Variable Expenses.

5. Use the “Extras” Wisely

In higher-earning months, it can be tempting to splurge or upgrade your lifestyle. Instead, use that extra income to strengthen your financial foundation. Some smart ways to use the extra money include:

• Building or replenishing your emergency fund
• Paying down debt
• Contributing to long-term savings goals, like retirement or a down payment on a home
• Beefing up a category of your budget that is depleted

At the end of the year, take stock of any remaining extra income and decide how to allocate it toward your financial goals. Whether it’s saving, investing, or treating your family to something special, make sure it aligns with your priorities.

(Need help with figuring out your financial priorities? Download my FREE Budget Goal-Planning Worksheets printable pack. This free printable pack was designed to help you dream about goals for your finances, walk you through the steps to turns those dreams into realistic goals, and then break them down into monthly, bite-sized pieces.)

6. Practice Gratitude and Contentment

Finally, remember that managing money isn’t just about numbers — it’s also about mindset. Focus on what you have and what you can do, rather than what you don’t have or can’t do. Celebrate small wins, like saving $25 or sticking to your budget for a month.

When you approach your finances with gratitude and contentment, you’ll find that managing an inconsistent income becomes less stressful and more empowering.

You Can Do This!

Living on an inconsistent income might require extra effort and planning, but it’s absolutely doable. By budgeting based on your lowest income, spending based upon a budget instead of what’s in your checking account, building a strong emergency fund, and using your extra income strategically, you can create a system that works for you. Over time, these habits will give you greater financial security and the freedom to enjoy life—even during the school breaks!

P.S. Need some step-by-step help to set up a budget? Check out my brand-new resource: The One-Hour Budget. A simple, effective guide to walk you through the process of setting up a realistic budget in just 60 minutes!

Want to make progress on your financial goals, but have no idea where to start?

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