How do you budget when you have irregular income?
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A friend wrote me this email wondering how I budget on an irregular income. I have some suggestions, but before I write them up on here, I wanted to throw the question out and see what people think. How do you budget for irregular income (e.g., if you’re a student, consultant, etc)?
How do you budget when you have a highly variable and semi- unpredictable income over time, due to significant amounts of contracting, short-term (summer) gigs, etc.?
My stipend is $x/month, but I not-infrequently make 1.5x, 2x, or 3x, often just for a week or a month, or for the summer, and even my stipend varies (by 50%) from year to year due to different combinations of support/fellowships. In short, I make “enough” money, but how/where/when is totally up in the air.
I get by without trying primarily because I’m frugal and focussed in my spending, and all my income goes directly into savings from which I mostly deduct fixed amounts monthly…
But it’s at best semi-planned and I still don’t always feel in control, particularly under extended periods of heavy deadlines and such when my ability to manage my life goes out the window, I totally lose touch with Quicken, and my spending even seems to increase due to much larger amounts of restaurant food (OMG NO TIME FOR GROCERIES!!1!).
The core problem is this: though my net savings cashflow is almost universally positive, I still pay major/one-time expenses directly out of savings (since that’s where all money goes aside from monthly rent, DRIP deposits, etc. that gets auto-deducted). In short, I’m half-way organized and the other half is just riding on the fact that I’m *generally* frugal and “relatively* well-off.
This is hard with such variable income since my innate pattern- matching skills no longer apply (“my savings is only up $2000 this month, something must be off or I must have spent too much” makes no sense when my savings should go up anywhere from $1000 to $7000, mid- month or any other time, depending which way the wind blew last Tuesday).
What do you suggest for budgeting on an irregular income?
Have you ever wondered how it is that some people are basically fine no matter what happens? They always find ...Read More