If your income varies month to month, whether you work on commission, freelance, or have an irregular pay schedule, it’s important to budget carefully to avoid overspending.
Here’s how to achieve this in EveryDollar:
Add an Income Line for Each Paycheck
Create a separate income item for every paycheck you expect to receive during the month.Use a Low Estimate in the Planned Column
Enter a conservative, low estimate for each paycheck based on your past income. If you’re unsure, review previous pay statements to find a reliable, historical baseline. This way, you can avoid overestimating and risk overspending.Build Your Budget Around Your Low Estimate
Create your budget and assume you’ll receive the lower income amount. This helps you live within your means, even if your income fluctuates.Adjust When You Get Paid
When your paycheck arrives, input the actual income amount to your budget. Then update the Planned column to match what you actually received.Allocate Extra Income Wisely
If you earn more than your estimate, use that extra money with intention--whether for building savings, paying down debt, or investing. EveryDollar makes it easy to reallocate the money in your budget to fit your goals.
Example:
Let’s say your monthly income ranges between $3,000 and $4,000. Budget using $3,000 as your Planned income, maybe $1,500 per paycheck if you get paid twice a month. When you get paid $3,500, update your Planned income to $3,500 (for example, $1,750 per paycheck), then decide how to best use the extra $500.
Budgeting for the highest amount and only receiving the lower end ($3,000) can cause stress and will force you to make cuts to your expenses. Planning conservatively helps you remain on solid financial footing.
💡 Pro Tip: Consider creating a Hill & Valley Fund to help manage months with lower income and save for those times when you earn more. Learn more in the Over the Hill, Through the Valley section of this article.
Paycheck Frequency