Budgeting Strategies for Those with Fluctuating Incomes

How do you create a budget when your income fluctuates?

When your income is different each month, you may wonder: how can I create a budget? When income varies, it’s more important than ever to ensure that you have a budget in place to manage your spending. The good thing is, creating a budget on a fluctuating income is similar to creating one for a steady income.

Here are a few tips to keep in mind when creating a budget with a fluctuating income.

Make a List of All Your Bills, Both Fixed and Variable

In order to get a better sense of the monthly requirements for your budget, start by getting a handle on your bills.

Fixed expenses: These include your rent, insurance, daycare costs and other expenses that stay the same each month.

Variable expenses: You may have other reoccurring bills that vary each month. They may include your phone bill, gas and electric bill, water bill, and groceries.

“Other” expenses: You don’t only spend money on bills, so be sure to calculate the other expenses you have each month. These may include eating out or standing appointments at the salon.

Find Your Minimum Monthly Income Budget

Find your baseline income by looking back over previous pay stubs. What’s your minimum monthly income over a period of time? If you work in an industry that pays commissions or tips, take those into account as well.

After you estimate your minimum monthly income, you can calculate your minimum monthly budget on the thinnest income you expect to receive in any month.

During more profitable months, you can put more money away in savings.

Develop a Plan for More Profitable Months

After determining your monthly minimum income, take some time to plan for higher-income months and what you will do with the extra income. Without a plan in place for the extra money, you may end up overspending in higher-income months on unexpected purchases. It’s helpful to keep your long-term financial goals top of mind. Do you want to retire someday? Consider putting a portion of your extra money from higher-income months into a 401k or IRA plan. Do you want to take a trip? Create a travel fund and put aside extra money to plan your next adventure.

You may also want to build an emergency fund with the extra money in higher-income months.  According to Bankrate’s 2019 Financial Security Index, almost 3 in 10 U.S. adults have no emergency savings. If you were to fall onto hard times, an emergency fund can be a lifesaver. Consider putting extra money from higher-income months into a separate emergency savings fund. If your budget allows, you can even include emergency fund savings as a fixed monthly expense.

Find Ways to Earn More Money

In some fluctuating income jobs, you may have more control over your income than you think. For example, in the service industry, you may work with your manager or coworkers to improve your customer service skills and earn more tips. In a sales-based job, you can pick up new sales techniques to boost commissions.

When this isn’t possible, you can consider the following methods to earn more money.

Ask for a raise. When appropriate, you can build and present your case for a raise to your manager. Use tools like Glassdoor to help determine the baseline income for someone in your role.

Pick up a side gig. According to Yahoo Finance, 51% of people with side gigs work part-time as well. If you have a special skill, consider offering your services as a freelancer or consultant. If you’re the creative type, you may sell crafts or offer creative services on websites like Etsy or Fiverr.

Find a new job. Sometimes, the best way to earn more money is to find a new job. Update your resume and apply somewhere new. You may also use a headhunter or agency to help you search for new jobs.

Want to improve your overall financial health? Here’s a tip!

Practice Good “Financial Fitness”

The CFA Institute (Chartered Financial Analyst Institute) defines financial fitness as:

“… feeling good and confident about your financial situation. It means being able to manage your money in order to meet your current and long-term needs.”


  1. https://www.policygenius.com/blog/four-strategies-to-build-the-best-budget-on-a-part-time-income/
  2. https://www.moneyunder30.com/variable-income-how-to-manage-money-when-you-dont-earn-steady-paycheck
  3. https://finance.yahoo.com/news/heres-how-workers-are-using-side-hustles-to-get-ahead-112347456.html
  4. https://www.bankrate.com/banking/savings/financial-security-june-2019/