Budgeting on an Irregular Income

One of the hardest things my husband and I have encountered while being self-employed is maintaining a budget. With a fluctuating income, it can be a challenge to plan for expenses. For us, the key to successful budgeting is creating a “steady income.” We do that by depositing all net income into one account and paying ourselves a monthly household salary, a median of the highs and lows. In other words, even when the previous month’s income was high, we maintain an average income, thus leaving enough to cover the low-income months as well. To successfully track our spending, we have established a detailed spending plan that includes all our fixed and periodic expenses. We also maintain a careful savings plan. The saying “don’t count your chickens before they’re hatched” is especially relevant when you are self-employed. You cannot spend what you make month to month. You have to look at the overall picture and set a budget plan within fixed parameters.
Katie Stone, Utah

Illustration by Joe Flores