How to manage your finances when you do not have a stable income

Whenever you hear the word budget, it usually linked to creating a monthly forecast but how do you do that when your income is not monthly?


How can you create a sense of stability and structure when your income is the complete opposite?


Standard budgeting advice is usually aimed at those working in a 9-5, with a regular paycheque. But not every person has this advantage; millions of people in the UK are either self-employed or working shifts (where they get paid on different days for different amounts throughout one month).


Whilst those ways of working have huge benefits, we cannot avoid the fact that having an irregular income makes it more difficult to budget but all hope is not lost - there is definitely a way that it can work for you!


Essentially the aim of creating a budget (or spending plan) is to:

  • Help you live within your means

  • Make sure you can afford to live and pay for your bills

  • Allow you to work towards your financial goals

And to benefit from the positives of budgeting, you need to find a way that it can work for you so let's discuss the top tips on how to budget if you have an irregular income.


Identify your expenses

First of all, get a full understanding of your financial landscape. Whilst you might not know the money coming in, you can map out the money you know will be going out. This awareness will not only give you a peace of mind, and puts you in the driver seat of controlling your finances.


Start by making a full list of all fixed bills and committed expenses (i.e. rent/mortgage phone bill, internet, utilities etc). Work out the value of each expense and the date it leaves your account. Aiming to have enough money to cover these payments is important so that you don't miss any payments - use this as a foundation for your budget.


Maybe you will evaluate and realise that your outgoings are unsustainable and too high, and it feels unachievable to be able to afford everything (alongside general spending and living). Consider cutting down on your expenses - could you get cheaper deals with other providers, could you get a discount from your current supplier, or do you need to cut that expense out altogether (even if it is only for a short period of time)?





Understand your spending habits

Outside of our bills/committed expenses, we have to spend money to survive and some expenses can vary from month to month (these are usually called variable expenses), for example, petrol or groceries. You usually have greater control over the amount you spend. If you can become aware of how much you usually spend on these expenses every month, you can get an idea of how much money you need to survive (outside of your fixed expenses).


Tracking your spending is a great way to practice mindful spending and the awareness allows you to make financial decisions on where you are comfortable spending money or where you might want to be a bit more frugal.


Try to forecast your expected income for the month

If possible, calculate your average income (look back at your income over the last few months and work out the average income you receive each month) and use this amount to forecast your monthly budget.


Alternatively, you could plan for the lowest expected income and anything over that amount is a bonus and can be put aside to carry over to the next month or to go towards your financial goals. This way you know you will always be able to afford your bills and afford to live.


For example, if you have a basic wage you are paid every month but sometimes do extra shifts or overtime, you could forecast your mont