Irregular Income

Irregular income summary:

• Irregular income varies in amount and frequency. 

• Your income is considered irregular if you don't make the same amount of money every month or get paid at the same frequency. 

• Freelance work, seasonal jobs, and commission-based jobs are examples of irregular income sources.

Irregular income definition and meaning

Irregular income is income that varies in amount or occurs at uneven intervals. Your income could be irregular if you don't earn approximately the same amount of money on a predictable schedule. Your income might vary monthly, season to season, or year to year. Gig work, freelance work, seasonal jobs, and commission-based jobs are situations where income is often irregular. 

Key concept: Irregular income is income that varies in amount or frequency.

Irregular income: a comprehensive breakdown 

Many people earn or receive a regular income on a fixed schedule, like a yearly salary paid every two weeks by paycheck. Others earn or receive irregular income. The amount and timing or frequency varies. 

Irregular income could make it harder to budget, cover expenses, and save money. But it’s entirely possible. 

The following tips can make it easier to budget when you have income that fluctuates. 

Calculate your expenses

Review your bills and calculate the total cost of your necessary living expenses. Examples include rent or mortgage, utilities, insurance, transportation, and food. The first thing you need to know is how much your necessary living expenses cost.

If you don’t know exactly how much you spend, start tracking your expenses. Keep a notebook or use an app. You’ll have a good idea of expenses after one month, but don’t stop tracking. Most people’s expenses fluctuate seasonally, so you’ll have a more full picture of what you spend and how much money you need if you continue to keep an eye on your transactions. Tracking expenses is also a great way to identify areas where you want to spend less.

Determine your average income

If you have irregular income, calculate an average. Tally up your total income over the last year and divide that by 12. This will determine your monthly average income for the previous year. If you’re not sure how much you earned in the last year, go over your bank statements and look for deposits. 

Like your expenses, it’s important to track your income. That’s especially true if you sometimes receive cash. You’ll have an easier time deciding how to spend your money if you know what you’re working with.

Your average can be used as a guide when setting your budget. Ideally, your average income is more than you need to cover your necessary expenses. If that’s true, you can allocate the rest to your financial goals, like paying down debt or saving up for emergencies. 

Related: Living paycheck to paycheck: Strategies to break the cycle

Save for low-income months

When you have income that fluctuates, your earnings will be higher some months and lower in other months. When your income is higher, set aside some extra money in an emergency fund. That’s the money you can rely on when your income is low or nonexistent. 

Real-life examples of irregular income 

Here are a few examples of irregular income: 

• Seasonal work 

• Gig work

• Freelance work

• Commission-based sales jobs 

• Tips from service-industry jobs

• Self-employment 

• Part-time hourly jobs