IRREGULAR INCOME
Budgeting when your pay changes month to month.
Commission, tips, gig work, seasonal jobs and self-employment make it hard to plan from one paycheck. The answer is to plan from a careful baseline and let good months fill a buffer.
1. Find a baseline
Look at your take-home income for the last 6 to 12 months and use one of your lower months, not the average, as the amount you plan with. Planning on a low month means most months will come in at or above plan.
2. Cover essentials first
Rank your spending: housing, utilities, food, transportation, insurance and minimum debt payments come first. Make sure the baseline covers these before anything optional.
3. Build an income buffer
In months that come in above the baseline, move the extra into a separate savings account before spending it. Over time, aim for at least one month of essential expenses there. In a slow month, top up from the buffer instead of using a credit card.
4. Set money aside for taxes
If no taxes are withheld from your income, such as self-employment or 1099 work, set aside a share of each payment for taxes as it arrives and keep it separate. Check with a tax professional or the IRS for how much and when estimated payments are due.
5. Plan good months on purpose
When a month comes in well above plan, decide where the extra goes in order: refill the buffer, set aside taxes, then extra debt payments or savings goals.
Using the planner
Use Paycheck plan for each payment as it arrives, and Cash flow to see whether upcoming bills will be covered before the next one. Savings goals work well for the income buffer and tax money.
These guides explain common budgeting approaches. They are general information, not financial advice.