I’ve had an irregular income for many of my working years. (The expression “make hay while the sun shines” was pretty much my motto.) This was just the way things were in my world, so I was used to it. Because of this, I was forced to learn how to plan out my spending with an irregular income in mind.
Budgeting with an irregular income isn’t really much different from budgeting with a steady paycheck. The biggest difference is that it forces you to THINK about your money and priorities more proactively.
Many people approach budgeting like this: they think ok, I make $2000 a month, so that means I have $700 to spend on my rent, $300 on groceries, etc. When really a good way to approach it is to start with the basics and THEN figure out how much you have available to spend. This is because you need to spend your money on first things first.
What do you and your family really NEED, in order of importance? Probably food (but not eating out!), health care, and shelter, in that order. Next, decide what the other things are that you WANT. For me that list looks like this: retirement, travel/entertainment, transportation, telephone, other investing, grooming, giving, and clothing. That’s right, I’d rather be able to do fun things than put gas in my car. I’d rather be able to make investments than have a nice haircut, etc.
Once you’ve made these lists, break down the most important ones into their associated parts, and put a dollar amount to them. For example, “shelter” might include your house payment, your taxes, your homeowner’s insurance, your electric bill, and your water bill. It would not include things like cable TV or a phone. Prioritize your entire list, then take a step back.
What is the minimum amount that you need to earn each month to cover the basics? How much more would you need to cover the wants that are billed monthly? How much would you need to cover your entire list?
Those are your three goal points. (You may find it helpful to draw lines at these points.)
Total up the three goal points for an entire year as well. Do you generally make at least that much in a year? If so, you’re probably in good shape. If not, you may have to get a J.O.B. that pays more regularly, cut some things from your list, earn still more income from a new source, or all of the above.
From this point out it’s a matter of paying things in order and (most importantly) exercising self-control. Look at your list every time you earn some money to remind yourself that even though you made $5000 this month, you need $3000 of that to cover the months you might only make $1000. I cut fun things in order to save up money to pay less-fun-but-more-regular things like the telephone bill. It’s also an excellent idea to track your actual spending, if you’re not doing that already. Finally, remember that a budget is a fluid thing. It’s going to change much more often than it remains the same, especially at first.