How to use the irregular income budget planner
- Enter your income for each recent month, at least three and up to twelve. The starting numbers are examples, so replace them with your own.
- Choose what to plan your pay around: the lowest month, the lowest three months averaged, or the average of all months.
- Enter your cash buffer now, your essential costs per month and a buffer goal in months of essential costs.
- Read the monthly pay you can set for yourself, how the buffer would have moved month by month, and warnings. Print the plan or save it as a CSV file.
Formula
Planned pay = the lowest month, the average of the 3 lowest months, or the average of all months, rounded to the cent
Buffer after a month = buffer before + income - planned pay
Buffer goal = essential costs x months in the goal
The months you entered are replayed in order. Income above the planned pay goes into the buffer, and income below it is taken from the buffer.
Worked example
With monthly income of $3,200, $4,800, $2,600, $5,200, $3,900 and $3,000, the three lowest months are $2,600, $3,000 and $3,200, which average $2,933.33. The average of all six months is $3,783.33, and the best and worst months are $2,600 and $5,200.
Paying yourself $2,933.33 each month, the buffer grows by $266.67, $1,866.67, then falls by $333.33, and so on, ending at $5,100.02 after six months (each step is rounded to the cent). With essential costs of $2,500 and a goal of 3 months, the goal is $7,500, so $2,399.98 remain to reach it.
Why a steady pay helps
When income changes a lot from month to month, budgeting against the best month leads to shortfalls and budgeting against the average can still overspend in a weak stretch. A common approach is to pay yourself a steady amount that your lower months can support, and to let the extra from stronger months build a cash buffer that covers the weaker ones.
The three lowest months average is a middle path: it is steadier than the lowest single month and higher than relying on a worst case. Try each basis and watch the buffer. If the buffer would have run below zero in your own history, the planned pay is too high for that history.
Limits of the replay
The tool replays your months in order and shows how a steady pay would have worked in that period. It does not predict future income, and it does not set aside money for taxes, which people with variable income often have to pay themselves. Treat the buffer as cash for expenses, and keep tax reserves in a separate account.
Nothing you enter leaves your browser, and nothing is stored unless you choose to save. See also the budget planner, the income goal calculator, the sinking fund calculator and the zero-based budget calculator.
Assumptions and limits
- Income entries are amounts you actually received in each month, from $0 up. Months with no income can be entered as 0.
- The 3 month buffer goal and the starting income numbers are examples. Choose your own.
- Taxes, irregular large expenses and seasonal patterns beyond the months entered are not modeled.
- Each step is rounded to the cent, half up, so the buffer column adds up exactly.
Frequently asked questions
How do I budget with irregular income?
Pick a steady monthly amount your weaker months can support, pay yourself that, and put the surplus from better months into a cash buffer. This tool helps you test different amounts against your own history.
Which basis should I choose: lowest, lowest three or average?
The lowest month is the most cautious. The average of all months is the most optimistic and can drain the buffer. The lowest three months sits between them. Test each and watch whether the buffer stays positive.
How big should my buffer be?
That is your choice. Many people aim for a few months of essential costs, and people with very uneven income sometimes aim for more. The goal field here is an example you can change.
Does the planner handle taxes?
No. If you pay your own taxes, set money aside for them separately and treat only the rest as income for this plan. A tax professional can help you estimate payments.