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Not everyone has a set income. Freelancers, seasonal workers, and even teachers need to master budgeting with irregular income. Here’s how you can do it.

Budgeting with a regular paycheck is already challenging enough. Imagine not knowing what you’ll be paid from one month to the next. Freelancers, gig workers, and even seasonal workers need to manage their finances with an irregular income.

It means a different approach when it comes to budgeting. It is possible, though. Trust me; I do it—and I’ve done it for the last decade or more. Fluctuating earnings can make it tricky but not impossible.

Know your income patterns

In a lot of cases, you’ll see that there is a pattern to your irregular income. This can take a couple of years to figure out, especially when you initially start to grow your business. Take a look at when your peak periods are, when your slower months are, and whether there are cyclical changes that affect your income.

By looking at this, you can start budgeting with irregular income. It’s possible to use the previous years as a rough guide to set up a budget, saving for the slower periods when you have a surplus.

MORE: It’s okay to admit you’re failing at your budget

Use a baseline for budgeting with irregular income

You will still want to have a set budget each month. There are two ways to do this.

You can work with the lowest amount you’re paid each month. Look at what you’ve come out with at your lowest point in the last couple of years and make that your base. Your expenditures need to be less than the baseline—or on par. When you have better months, you will then save that surplus money. It can be great for if your lowest drops at some point or you find yourself between clients.

Another option is to average out your payments. Look at what your income has been for 12 months. Add all the months together and divide it by 12. Some months, you will have less than that come in and other months you’ll have more. You can use the months you have more to supplement the months you have less.

I prefer the first method, but that’s because it works better for my brain.

Build a cushion for your finances

You may lose a client and not be able to replace that income quickly. Or maybe you found yourself heavily affected by the Helpful Content Update from Google at the end of 2023. Either way, you need an emergency fund. Anything could happen.

Make sure you factor this when budgeting with irregular income*. Work on building that financial cushion to six months’ worth of living expenses.

As you get better months, you can save more.

Plan ahead for your taxes

If you’re self-employed, you will need to pay your taxes out of your own pocket. That means saving up for them. Always take this off your paycheck before you use your paycheck to budget for it.

The amount you save will depend on your location. Here in Ontario, due to the tax bracket that I’m in, I save 30% of my income for my taxes every April. I actually pay my taxes every three months, which does help a little with budgeting as well.

Have all this in a separate savings account. I like to use a high-interest savings account where the money isn’t locked in for any length of time so I can grab it as the CRA wants it.

You’ll also want to budget for any other unusual expenses. I make sure I have an account for any business expenses that I may need every few years, such as a new computer, any subscriptions that aren’t monthly, and any unexpected medical bills.

MORE: Need help with your budgeting? Get in touch!

Don’t rely on one income stream when budgeting with irregular income

When I first started freelancing, I started with one client that took up a lot of time. While the pay was decent, it was just one client. When that client went, I had to figure things out quickly. Now I make sure that not all my eggs are in one basket.

You need addition income streams. This could be with other clients in the same line of work that you do, or it could be other side businesses. I offer services on Rover, which is completely different to my writing business.

The more diverse your income is, the more stable you will be. Not everything is going to disappear at once, making it a little easier to budget when one client disappears.

Make sure you review your budget regularly

When you do lose a client or you add a new revenue stream in, you need to look at your budget again. It’s essential that you always stay on track with your financial situation*, especially with an irregular budget.

You may lose a small client and not think that it matters too much. You have the surplus. While that’s fine at first, it doesn’t stay that way. You either need to replace that income, or you need to change your budget. If you’ve not replaced within a month or two, always adjust your budget to work for you new circumstances.

MORE: What does FIRE mean in finance?

What do you find difficult when budgeting with irregular income? What tips would you share? Let me know in the comments below.