Budgeting is an important part of how our household works. It’s how we can afford for me to be a stay-at-home-mom, it’s why I bother with meal planning, and it just helps keep the gears properly greased in this house so we can function without the stress of finances weighing on us.
Occasionally, we have to budget for irregular income. Hubby’s income is very consistent and predictable, which makes our monthly budgeting very simple, but I contribute some income to the household via affiliate income, odd freelance jobs, or through my custom embroidery shop; and as Dave Ramsey teaches, a dollar without a name will disappear. (Click here for a free printable of Dave Ramsey’s 7 Baby Steps to Becoming Debt Free!)
Irregular income can be a pain to budget for – I mean, how can you? The very definition of irregular means you can’t plan for it. You often can’t predict amounts or dates, which makes it hard to put that money into monthly spending categories.
However, where there’s a will, there’s a way!
How to Budget for Irregular Income
Since we do things the Dave Ramsey way around here, we figured we would consult him first. Turns out, budgeting for irregular income is actually pretty easy, especially once you have your monthly spending budget in place. Having a solid foundation is the key to winning financially.
Step 1: Evaluate. Once you know where your regular expenses sit, think about all of your other financial goals. Are you trying to pay down debt? Do you need new furniture? Are you wanting to take a vacation in the next year? Evaluate all of the places you want to allocate money over the coming months and write them down.
Step 2: Prioritize. Prioritize your financial goals. Maybe you want to pay off your store credit card first, then save some money towards a new dining set, and then have some extra saved up for dining out on your vacation in six months. Whatever it is, figure out what your goals are and list them in order of importance.
Step 3: Calculate. Once your goals are written down, make two columns to the right of your list. The first column will be the dollar amount needed for your goal, and the second column will be a running total. Fill it out, keeping a running total going. This is your irregular income budget. You’re done!
Step 4: Allocate. When your irregular income hits your account, allocate it towards the first goal on your irregular income budget. If you have enough to fully fund the first item, move on to the next one down the list, and so on!
Now every dollar that comes into your possession, even the little extra ones here and there, have a specific place to go so they don’t get lost along the way. This counts for financial windfalls, as well (tax returns, anyone?). This budget method will help keep you on track and ensure that you reach your financial goals!
Have you started budgeting yet? How has your family been impacted by a budget? Share here in the comments or join the conversation on Facebook!