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What if You Get Paid Irregularly? (in other words; not monthly, not every two weeks…)

May 19, 2011

I’d guess that most people get paid a set amount every two weeks. But if you own your own business, you may only get paid once a month. Or every three weeks. Or whenever you make a sale. Maybe one month you make a ton of money, and the next you make only a fraction of the previous month’s salary. This makes budgeting a little more complicated. But not by much…

I recently come upon a post by J. Money that describes how he is doing is budget now that his income is coming in irregular spurts. YOU SHOULD REALLY READ HIS POST. He used to get paid every two weeks, but now that he is done with his day job, and works for himself, money comes in when it comes in…not necessarily on a regular monthly or bi-weekly “payday”. His new budget reminds me of ours. Even though I get paid regularly, a few months get three paychecks and our paycheck days were gradually moving to the back of the month, and coming in past the due dates of some of our major bills. I finally decided to just pay myself at the first of every month, regardless of when my paychecks come in. I just pay myself the amount in my budget at the first of every month, stash anything over that into our savings account, and stash anything we don’t use at the end of the month…

Here is how I would do it, if I was receiving paychecks 1.) on an irregular cycle, or 2.) in irregular amounts:

Actually, it is the same thing we do now…so this is a re-explanation. If you already know what I’m going to say, hurry and go check Facebook, or your email, or Twitter. Something more fun than a blog about being frugal and budgeting… 🙂

  1. I’d divide my money into at least two accounts, but probably three. The first one is the one I’d use to pay bills. It would be my main account. The second one would be for savings. I’d have it linked to my first one so that transferring money between accounts wouldn’t be a hassle. Hopefully, money is only transferring one way!
  2. I’d use some extra money (tax return…something like that) to get at least one month ahead. This may take a while. I’d want to know what my budget is, so that I couple have at least two months’ worth of money in the main account. All of the rest should go into savings.
  3. All of the money that I made in May, no matter when I made it, would go into the main account. Once I had made enough to cover June’s projected budget, I’d put any other money I made into savings. If I didn’t make enough money in May (enough to cover June’s projected budget), I’d pull enough money out of savings at the end of May to make sure that I had put June’s budget into the main account.
  4. In June, I’d only be spending May’s income as I spent through my budget. See? I’d pay myself enough money to cover my budget, and I’d save the rest.
  5. If, over time, I was only taking money out of savings instead of putting money in, I’d have to re-think my budget and find ways to cut my spending (just like any business would do, if they didn’t want to live on borrowed money).
  6. The good news: At the start of every month, I would already have all of that month’s money in the  bank, ready to go.
  7. At the end of each month, if I stay under budget, any un-spent money goes into savings!
  8. Mint does all of my tracking…
If you get paid on an irregular basis, or in irregular amounts, I’d be interested in how you do it! Please share…
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One Comment leave one →
  1. Eric M permalink
    May 20, 2011 8:26 am

    I started my own business in April and am starting to work out the bugs of irregularity of income. We are working on building up our savings more and I love the idea of paying yourself at the beginning of the month. If we are spending May’s income in May it makes it hard to swallow a house payment at the beginning of the month. Great advice!

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