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Todd's Two Cents

How to Handle Irregular Income

income Oct 25, 2021

Once in a while I will be asked by a college student or recent college grad the following question: "How do I budget if my income is not the same each month?"

It's a great question and applies to more and more young people today. The answer is to budget quarterly versus monthly.   

In the YMU Do Money Differently course I call a budget your "monthly spending plan" or "monthly cash flow plan".   

Most people don't like the word budget because they feel they will be deprived or are limited in doing fun things. That's just not true. So, if your income is irregular each month, create a quarterly budget or spending plan. Estimate what your next three months income will be. Spell this out in a Google Sheet or in Excel. Then, estimate what your fixed and variable expenses will be over the next three months.

Fixed = rent/mortgage, utilities, cell phone bill, car payment, car insurance, subscriptions (Netflix, Disney+, etc), memberships (gym), investments, etc.

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