How to Budget an Inconsistent Income

How exactly do you budget a variable income?

In other words, if you’re in sales and your income is based on commission, or if you’re in construction and your income is seasonal, how do you make sure your budget is prepared for those changes?

Here’s how you do it.

Make a list of everything you would put into a normal budget. You’ll include items like food, electricity, water, rent and so on. Include all of your monthly expenses and total it at the bottom.

Don’t forget about items like entertainment and “blow” money, even if it’s just a small amount. Now, ask yourself this: “If we had a horrible month and we only make enough money to do one thing, what would we do?” You put a “#1” next to that. Not sure what to pick? I’ll help you. Food!

After that, you pick your second priority. That should be utilities—your lights and water. Then it’s your rent or mortgage. Do you see what I’m talking about here? These are the basics—food, shelter, transportation, clothing. You take care of those things first.

At the first of the month, put those items in a list and go as far down the list as you can go. The list needs to be longer than the money. Every dollar needs to have a name.

It’s okay if you haven’t saved anything for a few months because income’s a problem right now. If you didn’t save anything because you went on a cruise, then that’s a problem. You’ve got your priorities wrong.

Take care of your necessities first, and then worry about all the “extras.”

That’s how you budget with a variable income.