Tips to Plan a Budget on Fluctuating Income and Saving Money

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The popular concept is that a budget works for individuals with a fixed income. But that is a misconception because a budget works for both fixed income and irregular income.

Disclaimer: All content provided is for informational purposes only. Please read my full disclaimer here for more info. Please note that this article is written on 3/25/2023.

Reasons to plan a budget on an irregular income

Control your expenses

Living on a variable income is challenging since you don’t make a fixed amount of money every month. You do not know how much you will earn every month, especially when you work as a freelancer, an independent contractor, or a small entrepreneur. While it is true that you can not control your income, but you can control your expenses. And that is possible through budgeting.

Know where you stand financially

A budget allows you to understand where you are standing financially. It shows you the areas where your money goes every month. And when you can get an idea about where your money goes, you can take steps to reduce your frivolous expenses and save money.

Pay off your credit card debts

When you are in credit card debt, you need two things. The first one is the credit card settlement guide to know about the debt reduction process. And, the second one is money.

Yes, you need money to pay off your credit cards. It does not matter if you want to pay off your debts on your own or through a debt settlement company. At the end of the day, you have to pay back your creditors even if the amount is less than what you owe. When you have an irregular income, it is challenging to save money. But a budget can help you to arrange the money you need and eliminate your credit card debt. 

Tips for planning a budget on fluctuating income

If you are a freelance writer or a small business owner, you can use the following tips to plan a budget on an irregular income.

1. Stick to the lowest monthly income figure

Check out your monthly income from last year. Find the month with your lowest monthly income figures. Collect your pay stubs throughout the year to find out the month in which you had the least amount of income.

The reason behind finding the paystub with the least amount of income is because it helps you to start with budgeting at a minimal level. You can always go up later when your monthly income increases. That will not be a problem.

2. Plan your budget based on that figure

Plan your budget based on your lowest monthly income. It is best to start with the lowest monthly income figure because it is safe. Suppose your lowest monthly income figure is $500. So, when you plan your budget, you will allocate your money accordingly to various expenses. The bottom line is you have run your family with that $500. Now, if in any month you earn $1000, then you will get an extra $500. You can always add that to your budget.

However, if you plan your budget based on your highest income month, you will be in trouble. Suppose the highest amount you have earned in a month is $1000. When you plan a budget on this figure, you allocate money in different categories accordingly. But you may not earn $1000 every month. In some months, you may earn $700, and in other months you may make $600 or even $500. It will be tough to reschedule your budget and trim your expenses all of a sudden.

After you have decided on the figure, it’s time to allocate your money into different categories. The must-have categories in your budget are:

  • Food – Basic groceries and food. Do not add eating-outs now.
  • Transportation – Gas, auto loan payments, and car maintenance costs.
  • Shelter – This includes mortgage payments, rent, and property maintenance expenses.
  • Clothing – Essential clothes that you need

After you have allocated money to your necessary expenses, it’s time to list your remaining expenses as per your preference from most essential to least essential. Make sure you set aside money for your savings and insurance. In case you have forgotten to list one expense, you can always reschedule your budget. 

Furthermore, keep in mind that you can always have fun even with a fluctuating income. But when you are planning your budget at the initial stage, you should cover your necessary expenses first. You can focus on the additional expenses later.

3. Make changes to your budget plan

Try your new budget plan for the month. In the middle of the month, you may realize that you will make more money than you have expected. That’s wonderful. Instead of spending the money, add it to your budget. Or you can use the money for settling credit card debt on your own.

4. Set aside money to survive the slow season

There are months when your monthly income is low. Again, there are months when you make a lot of money. How can you survive those slow months? A simple way is to use the money you have saved earlier.

Instead of touching your emergency fund, you can set aside any extra money you earn every month. You can build a separate fund with that money to pay your bills and buy necessities in the months when your income is low. Over time, your fund will grow. You will be tempted to spend the extra money in many months. But you have to control your impulsive spending behavior and save the amount. When your business is down, you can use the money to cover your monthly expenses instead of putting extra pressure on yourself.

5. Use the same budget plan for the next month

If your current budget plan helps you to simplify finances in the present month, use it in the following months also. You can always make the necessary changes to the budget plan if required.


So, now you know that budgeting with an irregular income is also possible. You can formulate a budget and use it for settling credit card debt on your own. Plus, you can use the budget plan to cover other expenses. All you need to do is follow the tips discussed in this article.

Linda Richardson is a New Jersey-based financial writer and a perennial student with an ongoing interest in learning new things. She uses her curiosity, connected with her knowledge as a financial expert, to write about a valuable lesson for small businesses. You can find her on Twitter at @LindaRossie9 Email at she currently writes for

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