Hello everyone! My name is Brenda Butnick and I’m a Financial Coach at Jewish Family Service in Dallas. I work one-on-one with clients to help them achieve financial self-sufficiency.
We discussed the last 3 types of Hidden Costs of “Buy Now, Pay Later” Plans in my last blog and today we will discuss How to Budget with Irregular Freelance and Gig Income.
Budgeting with an irregular income requires building a “barebones” budget based on your lowest-earning month, tracking income fluctuations, and using high-income months to build a buffer for leaner times. Prioritize essential expenses (housing, food, utilities), create a “boom-and-bust” savings fund, and set up a separate bank account to manage cash flow.
Key Strategies for Irregular Income Budgeting:
• Determine Your Baseline: Identify your lowest monthly income from the past 6–12 months to create a safe, foundational budget.
• Create a “Barebones” Budget: List only absolute necessities—housing, food, utilities, transportation—to ensure basic needs are met during low-income periods.
• Build a Buffer Account: Treat extra income from high-earning months as a bonus and save it to cover expenses in months when income is low.
• Use the “Average” Method: Calculate your average monthly income over the past year to plan for average expenses, while relying on a buffer fund for fluctuations.
• Prioritize Savings: Set aside money for taxes and savings consistently, especially in high-income months.
• Use Two Accounts: Use one account to manage income variability (a “holding” account) and another (the “operating” account) to pay yourself a steady, consistent “salary” each month.
We will discuss the steps to take now to Budget with Irregular Freelance and Gig Income in my next post on Friday, July 24th.
That’s all for your Financial Fitness today!
Until next time – take care and stay financially fit!
