Living Without a Steady Income

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Living Without a Steady Income

Written by Caitlin Wood

Living Without a Steady Income


Debt Management Income Personal Finance Unemployment

Having an inconsistent income can be extremely taxing on your finances, you’ll more than likely experience highs and lows. Living on a financial rollercoaster can make paying bills and saving for the future or an emergency seem impossible. Whether you’re income comes from seasonal work, commission based sales, bartending or contract work you need to create a consistent budget that works for all financial circumstances so when you experience a low income month you’ll know you can continue to live comfortably. Here are the steps you should take to create a realistic budget so you’ll be prepared no matter what your income is.

  1. Calculate and Track Your Income

First and foremost you need to calculate what your income actually is. If you have an irregular paycheque or receive income from several jobs you’ll need to gather all your paycheques and documents in one place and do some math.

  • Track your income for several months, this way you’ll know what your average monthly income is and can use that amount to create your budget.
  • Try lowering your monthly average income by 10-15%; this will create a safety net so you’ll be less likely to find yourself in a financially strained situation.
  • Try to predict when you’re low income weeks or months are, knowing beforehand will allow you to prepare.
  1. Always Pay Your Bills First

Paying yourself (or your bills) first is one of the best ways to guarantee that you stay on top of your spending and never run out of money by the time your bills are due at the end of the month.

  • Try opening two banks accounts, make one your “income” account and the other your “living” account.
  • Always deposit all your paycheques into your income account.
  • Transfer the money you need each month from your income account to your living account.
  • Use the money in your living account to pay for your bills, rent, food etc.
  • Any extra money can stay in your income account and be used during slow earning months.
  1. Create a Backup Spending Plan

Your first budget should cover all your basic needs and monthly expenses: housing costs, transportation costs, food, utilities and any debt repayment you have. You now need to create a backup spending plan for irregular expenses:

  • Include annual costs or bills, clothing, gifts/ holiday expenses and entertainment.
  • Think of your first plan as your monthly budget and your backup plan as your yearly budget.
  • Make sure you base your spending plans (both monthly and yearly) on how much you make during a slow month, this way you’ll always be prepared.
  1. Use Consistent Income for Consistent Expenses

If you have one source of income that’s more consistent than others make sure you use that money to pay for your consistent or essential expenses. You don’t want to plan to pay your rent with money that you aren’t 100% sure you’ll make; this can lead to serious financial issues.

Use irregular or inconsistent income streams for expenses that aren’t vital to your life like new clothing, entertainment and vacations.

This is obviously just a rule of thumb to keep in mind when creating your budget and you may find that you’ll need to use some of your inconsistent income to pay for consistent expenses.

  1. Prepare for the Unexpected

When you rely on paycheques from several sources or have an inconsistent income stream it’s always in your best interest to prepare as must as possible. Unexpected expenses could pop up at any time and seriously derail your finances; here are a few things you should be prepared for:

  • If you have irregular forms of income then you might be responsible for your own income tax deductions. It’s important that you put away part of each of your paycheques to cover this as you’ll definitely owe money every tax season.
  • Emergency fund. Everyone should have an emergency fund but it’s even more important for people who don’t have a regular income. An unexpected cost could end up putting you into serious debt.

Just because you have a fluctuating income doesn’t mean you can’t live a comfortable life and still be financially responsible. It’s all about learning to manage your expenses while living within your means and preparing for those months when your income is less than you expected.

Caitlin is one of Canada's leading personal finance writers. She is a graduate of Dawson College and Concordia University. She has been part of the Loans Canada team for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

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