How We Learned to Budget With an Irregular Income


In the LearnVest Personal Stories series, everyday people share the details of their money lives, discussing the individual choices they’ve made and how it’s impacted their financial journey.

Today, one woman explains how her family learned to budget—even when one of their incomes could vary drastically from year to year.

Our family defines the concept of “inconsistent income.”

I am an attorney who brings home between $70,000 and $80,000 per year (pretax), depending on my yearly bonus. My husband, John, is an independent contractor in the oil and gas industry, and there is nothing consistent about his job. We never know if and how much he is going to work, where the work will be or how much he will be paid—that’s just the nature of his project-based industry.

I knew this was my husband’s chosen career path when we were married in 2010, but it’s still hard. We can’t plan ahead, which is especially tricky considering that we have a 2-year-old son. We can’t set a consistent budget. We can’t wrap our arms around anything tangible to make financial stress of not knowing what the future has in store for our family go away. It’s not easy to create a budget when the “John’s income” box is filled in with “???.”

When I used to read articles encouraging readers to budget, I always wanted to scream, “I can’t!”

At least I did until we found a solution that seems to work for us.

The Trouble With Planning Ahead

In 2010 John worked a solid nine months. That was a great year for our family: We collectively brought home $125,000 before taxes. The next year, we brought home $114,000. In 2012, however, things slowed down for John. He started off the year with a project, but it was short-lived. Our total income dropped to $75,000. 2013 was also nothing to write home about—we took home $80,000 this year.

2014 is shaping up to be another big year. If John’s new project lasts through the end of the year, our income will be about $140,000. He’s constantly looking for part-time work in other fields, but he tries to be upfront about the fact that he may have to leave on short notice if an oil and gas project opens up. This doesn’t interest many prospective employers, and we both understand why.

While our income fluctuates greatly, our expenses are pretty much fixed. It costs us about $45,000 per year to live our current lifestyle in a small town outside of Cleveland, including day care, groceries, gas and utilities.

Fortunately the only debt we carry is our mortgage, and we are covered on my law firm’s health insurance. John could probably find a more stable job in a different industry, but he loves his career. He also never finished college (he is about a year away from having his bachelor’s degree), and while the oil and gas industry is flexible toward education, other industries would likely require a degree for any similarly salaried positions. Plus, there’s the opportunity for him to achieve a highly in-demand salaried position, provided he continues to work as a contractor and gain experience and connections.

RELATED: Hack My Budget: How Can I Trim $500 From My Monthly Spending?

In years past we frequently dipped into our savings account in order to maintain our lifestyle from the “big” years. We would tell ourselves that we would pay it back when John got another project, but somehow sticking to that plan was hard. We ate out frequently. We had a premium cable package, plus Netflix. We vacationed frequently without really sticking to a budget. While we didn’t go into debt, we burned money from our savings account without really knowing where it went.

  • flours

    Sounds like a supertight budget for three people…congrats for staying committed to savings such as retirement & education on this budget…but, 44% of income to housing seems high, I also assume they live in a cold environment based on the ‘snow plow’ comment, so maybe the weather is reflected in the high utility bills

  • MSH

    An interesting read. I applaud your commitment to seeing your spending in a clear-eyed way, and to socking away what funds you can on the 529 and retirement accounts. I also would like to respectfully note in regards to your statement “2013 was also nothing to write home about—we took home $80,000 this year” that “nothing to write home about” actually seems to be very decent income. For those of us still-employed but at half the hours (20) as previously and no benefits (in a very challenging job-search environment), earning $80,000 a year would be a significant improvement. It’s all relative, of course, and I thank you for sharing your story.

  • Tania

    I have a friend who does the same. They live off of her income (she’s a financial controller). Her husband’s income is a bit more stable than yours but does have a variable aspect. They live much more frugally than other couples with a similar combined income but are also going to be paid off on their mortgage and have a larger savings at a younger age because his income is not relied upon but “extra”.

  • Anon

    Super tight budget your family have an income with one person of 80000 a year what like WHAT that is not super tight. My partner makes about 20000 a year if even that and that has to support the three of us. I really think I should be writing article on saving and how we get by because people are insane if there reading this thinking oh my how are they surviving.

    • Anon

      Yes, please do. I would love to know how you do this.

  • Sharon Gilman

    Although I applaud the steps you’ve taken to make the money work for your family, this is not all that inspiring to those looking for tips on how to budget without a steady income. Because the fact is, you DO have a steady income. YOURS. An income higher than the average American, no less.

  • desertscrooge

    I’ve been crunching the numbers as per jumping into into self-employment for some time now and the thought of irregular income is a little scary. I don’t make anything near your single income though and don’t have a spouse income to back me up. Picked up a few tips though.

  • SW

    $70 – $80k guaranteed through the author’s full time job is a lot to work with. My immediate thought when I read the first few paragraphs was that they should live on her salary and leave his income for extras and savings.

  • C.A.

    I’d been hoping to find some advice for my own situation as a person with irregular income… but it seems that the solution presented is “get married.” Time to fire up the online dating profile, I guess…

    • PhilChance

      LOL, you could just become roommates where you have a business agreement. My BiL bought his first house this way, only one (of 3) had a constant income but they worked it out so that 5 years later they would have credit, experience and they sold the house.

  • PhilChance

    I agree w/ others that you do have a regular income, yours. I’d try to live below your means on your income. I think you’ve done good things w/ budgeting but I wonder if supporting your lifestyle is causing a problem. Long ago we decided to live below our means and invest. Even when I was broke I always made my food source good quality as this is an investment in our health So early on I had a space heater but rockin salads. Still to this day I use a space heater & bed warmer to save on electric. Getting our nails/hair done is not a requirement and there are cheaper alternatives where you would still look professional. Speaking of is your appearance, clothing a tax line item? Perhaps buying wasn’t the best idea either as that is debt until paid off. I’m glad you got a grip on your finances, good job.

  • Bre

    I have to agree with most of the comments on here. I was really excited about this article since my boyfriend and I own our own business and have super unpredictable income. I was hoping it would really give me some insights on how to budget with no steady income but it really didn’t. You have a steady income of $80,000. That is easy to budget with. Someday I would really like to hear from someone who has figured out how to budget without steady income. But then again, maybe it is not possible. The best I can do is budget 2 weeks out and hope I get more income in the next 2. That is the downfall of doing what you love,

    • Leelee B

      Excel spread sheets! I love them because I personalize it without limits, like software. It takes years, but if you learn to “enjoy” it, it gets easier and easier. Soon you will find yourself not challenged enough and look for ways to improve even on your perfections. You can start with the free online templates to give some direction. Don’t be afraid to make mistakes.

  • Eugenia Glos

    When is Learnvest going to do an article for someone that doesn’t have that high of an income? I want to see how a family of three budgets when one is disabled and the other doesn’t even make $30,000 a year, before taxes. While Learnvest has had some useful articles for me, most of these amazing budgeting stories irritate me. “Oh know, I only make $70,000 a year, I can’t budget or afford my life”. If we made $50,000, our debt would be gone and we would be doing great. Budgeting would be much easier and we would be able to start saving. Learnvest is kind of getting disappointing to me.

    • RiverDaughter

      Yes, I know what you mean. I also agree with other posters about the “unpredictable” aspect. I teach online and have temp jobs; these are very unpredictable. In truth I can’t have a real budget because I never make enough to cover all my expenses. But I guess LearnVest doesn’t usually address these things because their “target audience” is the young, professional woman who makes a pretty good salary but hasn’t figured out how to handle it well.

  • Leelee BLE

    Interesting article, but not truly budgeting on a irregular income, they still have salary of $70k per year, which btw is still a lot higher than most total family incomes, not to mention single parents. What would happen if the family had to live on the contractor’s income alone? This family had to tackle bad habits, not really budgeting issues. I am single and self-employed, I base my budget on a monthly average. I try to balance it on a quarterly, bi-annual and on annual basis. I also track personal and business expenses side by side to ensure there are no “leaks” or “black holes”. It also helps me ways find where I can save money and to prepare for unexpected emergencies.

  • Emily

    That is most definitely not an irregular income. She has a steady and predictable income. $75K and $80K is not a tight budget. I’d love to see Learnvest do some articles for those of us who are really on a tight and unpredictable income/budget.

  • Bonnie

    This is not really a post on how to budget on an irregular income. Their solution was to not count on his income AT ALL, which is what most couples with one steady $70K-$80K income in a LCOL area would do. This was more of a “don’t live above your means” post, which, while admirable, is also not all that helpful.