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How To Budget a Variable Income


Woman looking at bills and receipts on floor
David Sacks/ Digital Vision/ Getty Images

Budgeting on a variable income can be difficult. If you are self-employed or you work on commission only you may be faced with managing a variable income. This means that it is difficult to predict how much money you will have coming in during a given month. It is important to save a large percentage of your income on good months to help make up for the bad ones. Here is one way to budget your variable income.

Difficulty: Easy

Time Required: Two hours

Here's How:

  1. First, you need to list all of your expenses the same way that you would with a normal budget. This allows you to see where you money needs to go. After you have listed all the expenses, you need to add savings ten percent savings to your total. If you are self-employed you need to add in your taxes as an expense. If you have money above this budget amount in any given month it needs to go into savings. You may want to have a separate savings account for taxes and one specifically for months where you do not make as much money.

  2. Second, you will need to prioritize your expenses. You need to take care of your basics first. This includes the necessities such as food, shelter, electricity, and health insurance. After that you should list your debt payments and your savings. Then you can add in your clothing, gym memberships and fun money.

  3. Once you know how much money you will make that month, you sit down and subtract out your expenses until you have gone through all of your money. It is important to remember to save anything you make over the amount of your full budget. If you are working on getting out of debt you may decide to put a percentage of up to fifty percent towards your debts with the extra money.

  4. If you have a slow month, then you take the money out of the account that you have set up to cover slow months. These months you may want to scale back on unnecessary spending, so that you do not drain your savings account completely. This will also give you more motivation to work harder, so that you do not need to cut back. Generally, you should not be taking out money to cover all of your fun expenses.


  1. Once you have saved enough to cover two months worth of expenses, you may want to have your paychecks direct deposited into that savings account. Then you simply transfer the amount of your budget into your checking account at the beginning of the month. This helps you to continue to meet your expenses and save. When budgeting for a commission only income, this can be especially helpful.

  2. It is important to make sure that you have a fairly tight budget the first few years that you are self-employed. You may not realize the first year or two that your work is seasonal or that it comes in cycles. It takes many businesses five years before they make a consistent profit. If you are coming up short every month, you may need to look for another source of income to supplement your business. You can create a solid financial plan to avoid an income crisis.

What You Need:

  • A List of Expenses
  • Your Bills
  • A Calculator
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