Irregular income budget: how to plan when every month pays differently

A normal budget assumes the same amount arrives on the same day every month. Freelance work, gig work, commission and seasonal jobs do not work like that. This page shows how to build an irregular income budget in a spreadsheet: a baseline, a buffer, a set-aside and a plan versus actual check, with one worked example using invented numbers.

Why a normal budget breaks on variable income

A fixed monthly budget treats one low month as a failure. With variable income, a low month is expected. The useful question is whether you planned for it. Three pieces make that possible: a baseline income to plan against, a buffer that absorbs the gap, and a share of each payment that you keep apart.

The four pieces of an irregular income budget

1. Baseline income. The amount you aim for in a normal month, before any set-aside. It is your own number. Plan spending against it, not against your best month.
2. Set-aside. A percentage of every payment you keep apart. The percentage is your own assumption. A spreadsheet only does the arithmetic.
3. Buffer. Money you already hold that carries you through lean months. Choose a target in months of planned spending.
4. Plan versus actual. Planned spending per category and month, compared with what you really spent.

What to record

Keep two logs and one plan.

• Income log. One row per payment received: date, source, description, amount.
• Expense log. One row per spending: date, category, description, amount. Use a short, editable list of categories such as housing, utilities, groceries, transport, insurance, health, subscriptions, eating out and savings goals.
• Plan. Planned spending per category for each month. Mark categories as fixed or flexible so you know which ones can flex in a lean month.

The formulas

• Set-aside = your percentage x income received in the month.
• Income after set-aside = income received minus set-aside.
• Buffer at the end of the month = buffer at the start + income after set-aside minus actual spending.
• Months of cover = buffer / planned spending of that month.
• Buffer target = your target in months x planned spending.
• Lean month = a month where income received is below your baseline.
• Set-aside balance = running total of set-aside minus anything you pay out of it.

Counting months only up to the last month with data lets you fill the year as you go, with the later months left blank.

Worked example (invented numbers)

These figures are made up for illustration. Baseline income is 3,000, planned spending is 2,400 a month, the set-aside is 20 percent as an editable example and the buffer at the start of the year is 4,000.

A good month. You receive 3,800.

1. Set-aside: 20 percent of 3,800 = 760.
2. Income after set-aside: 3,800 minus 760 = 3,040.
3. Buffer at the end: 4,000 + 3,040 minus 2,400 spent = 4,640.

A lean month. The next month you receive 1,100, which is below the 3,000 baseline.

1. Set-aside: 20 percent of 1,100 = 220.
2. Income after set-aside: 1,100 minus 220 = 880.
3. Buffer at the end: 4,640 + 880 minus 2,400 spent = 3,120.
4. Months of cover: 3,120 / 2,400 = 1.3.

With a target of 2 months, the buffer target is 2 x 2,400 = 4,800, so this buffer sits 1,680 below target. The buffer absorbed the month, and the gap to target tells you how much to rebuild.

Paying something out of your set-aside

Sometimes you pay a bill from the money you set aside. Record it in its own category so it reduces the set-aside balance without counting as everyday spending. Your buffer and your plan versus actual comparison then stay clean.

Common mistakes

• Planning against your best month. Plan against a baseline you can reach in a normal month.
• No buffer target. Without a target in months you cannot tell whether the buffer is enough.
• Mixing set-aside with spending. Keep payouts from the set-aside separate from everyday costs.
• Renaming a category and forgetting old rows. Categories match by name, so change existing rows too.
• Waiting until the end of the year. A few minutes after each payment keeps the picture current.

Build it yourself or use a ready template

These formulas fit into a plain spreadsheet, and building your own is a fair way to start. A ready template saves the setup time.

The Budget Planner for Irregular Income is an Excel workbook with 7 tabs: Instructions, Settings, Plan, Income, Expenses, Monthly and Dashboard. Settings hold your baseline income, set-aside percentage, buffer target in months, starting buffer and 12 editable categories marked fixed or flexible. The income log has 400 rows and the expense log 1,000 rows with a category list. Monthly shows income against baseline, set-aside, planned and actual spending, buffer at the start and end of each month, months of cover, buffer target and set-aside balance. The Dashboard shows the last month and the year to date, the number of lean months, the lowest and highest month, plan versus actual per category and a chart. Example data is included and marked, so you can delete it before real use. A one page Quick Start PDF is included. It has no macros and opens in Excel and LibreOffice.

What it does not model

Version 1 does not model taxes or VAT of any kind, debts with interest, multiple currencies, bank import, joint budgets or forecasts of future income. The set-aside is only the percentage you enter. It was recalculated in LibreOffice without errors and has not been tested in Google Sheets.

Get the planner

The Budget Planner for Irregular Income is a paid digital download. You get the Excel workbook with clearly marked example data and a one-page Quick Start PDF. Nothing is shipped.

The same planner is also listed on Etsy as the Irregular Income Budget Planner, if you prefer to buy there.

*This page is general information and a description of a planning tool. It gives no financial, tax, accounting or legal advice. Microsoft Excel is a trademark of its owner. Size Run Studio has no affiliation with Microsoft.*

See the Budget Planner for Irregular Income

Frequently asked questions

How do you budget when your income changes every month?

Pick a baseline income you aim for in a normal month, plan your spending against that baseline, keep a buffer for lean months and put a share of each payment aside. Then compare planned and actual spending every month and watch how many months of cover your buffer gives you.

What is a buffer in an irregular income budget?

A buffer is money you already hold that carries you through months with low income. In a spreadsheet it is a running balance: buffer at the start of the month, plus income after set-aside, minus actual spending. Dividing it by planned monthly spending shows how many months it covers.

What is a lean month?

A lean month is a month where income received is below your baseline. Counting them over the year shows how often the buffer had to do the work.

Is this financial or tax advice?

No. This page describes a planning tool and a method for record keeping. The set-aside percentage is your own choice, and taxes are not modelled. Ask a qualified adviser about your own situation.