Developing a budget isn’t difficult if you know how much money you have to spend, but what if your income keeps changing? Then what do you do?

## Companies are using more contract workers these days, and that often means irregular hours and pay. Budgeting on a variable income isn’t difficult if you know a few tricks.

A budget is really just a spending plan, which is actually a more descriptive term. You’re planning what you’ll spend. We do this because spending less than you earn is the key to every financial success. It’s the foundation that everything else is built upon. Staying out of debt is nearly impossible without a spending plan.

Your plan gives each dollar a job and directs the flow of money in and out of your accounts. You’ll never be able to maximize your giving and saving without first making a plan.

This applies to everyone, whether you make a little or a lot. It’s also imperative, as a Christian, to wisely manage the resources God’s given you. Proverbs 27:23 reads, *“Know well the condition of your flocks, and give attention to your herds.”*

That means knowing how much you have coming in and going out and where those monies are directed. That’s the key to the idea of the spending plan. We’ll each have to give an account someday for how we managed money, so we need to have a plan.

The format you choose for your spending plan is up to you. You can use pencil and paper, or you can take a digital approach and for that we highly recommend you download and use __[MoneyWise app](https://www.moneywise.org/manage)__.

No matter which approach you choose, begin by tracking your spending for 30 days. Capture every expense, no matter how small. Then, think about non-recurring expenses and add them in with a monthly amount needed to have what’s necessary when that expense rolls around. This would be quarterly insurance payments, annual Homeowners Association fees, vacation expenses and your Christmas fund.

Then, take that 30 days of actual spending, plus the non-recurring expenses, and build a budget by category. Again, the __[MoneyWise app](https://www.moneywise.org/manage)__ will make quick work of that for you.

Once you take a first pass, you’ll need to do the work of bringing the budget in line with your income and making sure that your spending reflects your goals and priorities. If it doesn’t, that’s where you need to start cutting back and making changes.

That covers your expenses, constant and variable, but what about variable income?

Start with what you do know. What was your average monthly income for the last six months?  Can you reasonably expect to earn the same amount in the next six months?

The goal is to arrive at a budget that can be covered by the average (or slightly below average) amount you expect to earn each month. In the months that you earn more, it’s vital that you not spend the excess. Keep it in savings for the lean months.

A trick to help you do that works like this. Deposit all into savings, not your checking account. Then each month, transfer to checking only the amount needed for living expenses.

The extra money will be there in savings when you need it during lean times and the peace of mind that brings will be priceless.

You can also __[listen](https://www.moneywise.org/search?q=Variable%20Income%20Budgeting&videos=true&articles=true&podcasts=true&posts=true&groups=true&events=true&support=true)__ to the related podcast on this topic.

FaithFi

Articles

If your income and/or expenses keep changing, how do you create an effective budget?

MANAGE | Mar 17, 2022

Variable Income Budgeting

By: Rob West and Jim Henry

Where Faith Meets Finance

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