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Budgeting with Inconsistent Income

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My husband is a mechanical enginerd 😉 and I am a registered dietitian. He has one job, I have four. We moved to the city we currently live in for his job and I had a hard time finding one since my only work experience was from my dietetic internship. I took the first job I was offered in November 2011 as a contingent dietitian at a hospital and picked up shifts other dietitians took off. I finally found a part time position in town around February and the other two jobs fell into place over the past two months. I’ll spare the details of my four jobs since I recently explained them and I’ll get to the point of this article– budgeting with inconsistent income.

Two of my jobs have set hours each month and are my consistent paychecks. The other two vary depending on how much I can pick up each month. My husband and I transferred Dave Ramsey’s cash flow worksheet into an Excel sheet and used it religiously when we were paying off $30,000 in student loans so that every penny we found could go toward debt payoff. It started getting complicated when we couldn’t estimate how much we’d be bringing in each month because of my inconsistent jobs. That’s when we came up with a different strategy.

Only budget with CONSISTENT income

I used to have our budget based off of our consistent salaries plus what I make from working 6 days a month at the hospital because that’s what I was averaging. I didn’t like the uncertainty because at the beginning of the month I’d only have 2 scheduled days but by the last week I had logged anywhere from 6-13 days. We made a few changes and decided to only budget our monthly expenses based on my husband’s salary and my consistent paychecks.

Only budget for what we really “need”

We put 15% of our income toward tithe and 15% toward retirement. The only other large percent goes toward taxes. After setting those categories aside, we take all the other categories into consideration (rent (12%), groceries (4.5%), entertainment (1.5%), etc.) and found we were left with 20% of our consistent income to stash away for a fat down payment on a home. It will be interesting to do an evaluation of our total income in 2012 and see what the final percentage of each category looks like…

Any extra goes toward our financial goals

The income from my two inconsistent jobs goes directly toward our financial goals. That means 20% of our consistent income plus any extra I make goes toward goals. As of September 20th we checked off our goal of saving for second car we might need next year and our final goal for 2012 is saving for a down payment on a home we hope to purchase by summer 2013. We are throwing a huge amount toward our goals by living simply. Do we still have fun? Of course! We budgeted for it! We were intentional to factor in a set amount each month for entertainment and vacation or else I would probably be an over-zealous homebody.

Do you have inconsistent income? I’m sure those who are taking $30k challenge put on by Online Money Bloggers do— so how do you manage your budget?

This has been a guest post from Jessica. She is a Registered Dietitian and shares practical, useful tips on food, fitness, and finance. Be sure to subscribe to her blog, Budget For Health.

Budget Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

6 Comments

  1. If you have a sufficiently consistent baseline (or just low enough expenses) I think this strategy makes a lot of sense.

    I always prefer upside surprise, where I find out I have more money than I thought I would.

  2. Thanks SfH, I enjoy the surprises too! It was exciting to have an extra pay check to throw at our savings and get ahead of our goal schedule.

  3. It is great when you have a consistent base that can support you. I bet it gets trickier when you don’t have it and you have to rely solely on inconsistent income for your needs. I do have some inconsistent income but, like you, my needs are covered by my stable income so the extra.goes toward whatever goal I have at the time.

    • I would be a little more stressed if ALL of our income was inconsistent! Any extra I make is more of a bonus since we were fine living simply off of my husband’s income before I even found a job. I’m glad to hear you do the same with consistent/inconsistent income.

  4. Great job on your budgeting. My income isn’t inconsistent, but if it was I would budget the same way. A good old fashion spread sheet and my trust tool.. Yodlee.com

  5. Yah, following budget with consistent money is so simple and enjoyable. I use my consistent money to follow my budget and I know that I have extra money every month, so I put it in my investing.

    So, I follow my budget with my fixed income and I follow my investing with my inconsistent money.


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