Money Management Tips for Irregular Incomes

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Are you irregular? What we mean is, do your paychecks come at odd intervals and in weird amounts? Here's how to live normally with irregular income.

The following post comes from the Frugal Foodie at partner site Mintlife.

A reader asks…

Any tips for money management with irregular income, for individuals in occupations who typically have commission income, bonus income, etc.?

Reader, you are speaking my language. As a freelance writer, I don’t receive commission or bonus income. (I’ve always wanted a Christmas bonus, but I don’t see it happening.) But irregular income? You bet.

Let’s distinguish between two different scenarios: the employee who receives occasional bonuses and commissions on top of a salary, and the self-employed person whose income has stomach-churning variation from month to month.


If you make a salary with bonuses and commissions, your best move is to live off the salary and save the rest. This presumes, of course, that the salary is more than subsistence-level; I’m not recommending that a waiter live off sub-minimum wage pay and save their tips.

The financial benefits of saving your bonus are obvious, but there’s also a psychological benefit: As long as you don’t spend more than your base salary, you can be confident that your lifestyle is sustainable, without having to worry about cutting costs if you get a smaller-than-usual commission check.

Plus, you get the satisfaction of money in the bank. To me, these twin wins easily outweigh the short-term pleasure of spending your bonus money, even on something with a Retina display.

If your salary is meager and the bonus income is really a part of your pay, doled out unpredictably, read on.

Live freelance or die

A salaried employee receives regular pay, tax withholding, and probably access to a 401(k). The self-employed get none of the above. (And let’s not even talk about health insurance.)

So we have to build these financial goodies ourselves, with the same DIY ethic we bring to the goods or services we sell. Here’s how. Every time you receive a paycheck, split the money into three separate accounts: one for spending, one for taxes, and one for retirement. The tax account should be a regular bank account; the retirement account should be a self-employed retirement plan like a SEP IRA or individual 401(k).

This avoids the common freelancer plague of forgetting to set aside money for taxes, an excuse the IRS finds distinctly unconvincing, and the other plague of “forgetting” to save for retirement.

In The Money Book for Freelancers, Part-Timers, and the Self-Employed, authors Joe D’Agnese and Denise Kiernan call these three accounts (spending, tax, retirement) the Holy Trinity. Neglect them and you’ll find yourself in freelancer hell.

Now, what about the money left in the spending account? Pay it to yourself as a salary – weekly, biweekly, or monthly, whatever you prefer. Be conservative about how much you pay yourself; if you’ve just had a profitable month, don’t assume you’ll do just as well every month. Look back over the past year or two, calculate an average, and subtract a bit for unanticipated lean months.

Pay yourself too much, and you might have to dip into emergency reserves, or worse. If you underpay yourself and your spending account becomes overgrown with languishing earnings, however, I can think of worse problems.

Mo’ money…you know the rest

Irregular infusions of cash tend to overwhelm the responsible part of our brains. It’s hard not to feel rich when you get a larger-than-average check, even though our inner bean-counter is saying, “That money is supposed to last three months.”

People who manage to spend and save responsibly despite irregular income tend to use a system like the ones I described above, because it takes willpower out of the equation. Instead of having to decide what to do with each $100 that comes in (save it? spend it? let’s spend it!), you’re following a set of rules.

I know a lot of people are resistant to any system that forces them to admit that, by analogy, if you left them in a room full of cookies, they would eat all the cookies. Sure, the truth hurts. Since the alternative is financial misery, however, I swallowed my pride (and probably a few cookies) and set up a system to keep me out of trouble.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Lookin’ Good! How to Get a Killer Deal on Eyeglasses

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,902 more deals!