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6 Financial Tips for People with Fluctuating Income

A woman and a child are in a kitchen spreading peanut butter on bread slices. The child is holding a butter knife, and the woman is assisting. An open jar of peanut butter is on the counter.

A strong budget is a key part of financial wellness. It represents a game plan for managing your income, and it’s built around two important pieces of information—your monthly take-home pay and your expenses. But what if your earnings fluctuate from month to month? This can be the case for hourly workers, self-employed folks, and those who work on commission. Budgeting and planning for the future may feel tricky if you have irregular income. These six tips might be worth trying.

1. Create a conservative budget.

Your take-home pay plays a big role in your budget. If that number moves up and down each month, consider basing your budget on the lower end. This creates a lean budget that plans ahead for lower earnings. For example, let’s say your monthly take-home pay ranges anywhere from $3,000 to $5,000. A conservative budget would assume that your after-tax earnings are $3,000 per month. If you end up making more in a given month, consider it a cherry on top that you can put toward your savings goals.

2. Prioritize saving.

After your monthly bills are paid, it may be tempting to put the rest toward flexible spending. That includes things like eating out, shopping, and other discretionary expenses. That’s not to say these things aren’t important. Cutting them out of your budget entirely can affect your quality of life. But you might consider putting money toward your savings goals first, and then using the remainder for flexible spending—instead of the other way around. Your savings goals might include:

    • Building your emergency fund
    • Reducing your debt load
    • Contributing more to a retirement account
    • Saving for a down payment on a car or home
    • Putting money aside for your next vacation

3. Use cash windfalls to your advantage.

Maybe you have a particularly great month where your earnings are higher than expected. That’s always a good thing! During these months, consider putting extra money toward your savings goals. Those who have irregular income might choose to top off their emergency funds. Having extra cash on hand can help prepare you for leaner months in the future.

4. Look for ways to steady your income.

When you look back at your income from the last year or so, do you notice any trends? Maybe there’s a time of year when business tends to be slower (or busier). Having an idea of what to expect income-wise could help you with your budget. Beyond that, are there any ways to steady your income going forward? Here’s what that might look like:

    • Hourly workers: Picking up extra hours or taking on permanent shifts. You might also consider looking for a position that pays a regular salary.
    • Folks who are self-employed: Upping your marketing efforts and looking for new clients.
    • Commission-based workers: Fine-tuning your sales skills. You can also think about picking up a side gig to bring in extra income.

5. Reduce your expenses.

Income is only one part of a working budget—the other part has to do with your expenses. If you have irregular income, reducing your expenses can help stretch your dollars a little further each month. Here are some ideas for doing just that:

    • Shop around for different insurance policies to see if you can land better rates. That includes home and auto coverage.
    • Compare different cell phone plans and internet providers.
    • Begin meal planning every week
    • Join a carpool to reduce your gas spending
    • Cancel any subscription services or memberships you don’t need
    • If your employer offers an HSA or FSA, consider opting in during open enrollment season.

6. Make a debt repayment plan.

Carrying high-interest debt can eat into your earnings. As of the second quarter of 2023, the average credit card APR was over 22%, according to the Federal Reserve. There are several different ways to approach debt repayment:

    • Debt snowball method: With this method, you make your minimum payments on all of your debts but pay more on the account with the lowest balance. Once it’s paid off, you roll that payment into the next account with the lowest balance. You continue until all your balances get to zero.
    • Debt avalanche method: This works the same way as the debt snowball, except that you prioritize whatever account has the highest interest rate since it’s costing you the most.
    • Debt consolidation: A debt consolidation loan allows you to take multiple balances and roll them into one new account—hopefully with a lower interest rate. You’ll then have one monthly payment going forward.

Having irregular income can present some unique financial planning challenges, but that doesn’t mean you can’t work them out.

All information herein is for educational purposes only and should not be relied upon for any other use. The information herein does not constitute the rendering of financial, business, accounting, securities, tax or legal advice or other professional advice by DailyPay. No fiduciary obligation or duty exists, or is created, between you and DailyPay. DailyPay does not warrant the completeness or accuracy of any information provided to you.

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