Episode 22: How to Budget for Inconsistent Income

We answer listener questions on budgeting for an inconsistent income and what to do with a large inheritance.

Show Notes

Our first question comes from listener Ashley

My husband and I got married last year and just recently started getting more involved in our finances as a married couple (setting our goals, deciding where our money should go etc.) I am currently in grad school finishing up my Master’s degree in Speech language pathology and will be graduating in May 2018. I have a part-time receptionist job but only work the weekends during school semesters because Mon-Fri I am doing a full time externship for my graduate program (unpaid unfortunately). My husband is a personal trainer and his income is dependent on how many people he trains per pay period. With many of his clients going out of town on business trips, calling out sick, etc. it’s been very hard to create a stable budget with our ever fluctuating paychecks. Do you have any advice for us that would help us budget better with fluctuating income? I have downloaded Every Dollar app on my phone and so far I really like it. It’s been helpful to track our expenses but I feel like we are still having to take money from our savings to pay the monthly bills. What would be a good approach to budgeting when income in different each month

  • Luckily you have a short-term problem. If you are contributing to retirement, stop.
  • Breakdown you budget into shorter periods of time. We always talk about monthly budgets, but when your income is unknown or changes, a bi-weekly budget may be more useful
  • Questions to ask
    • When are your bills due?
    • What has to be paid?
    • What is your average income per month?
    • What is the lowest amount that you have taken home?
    • Go barebones. Do you come out ahead or behind on your worst months?
    • If you have more money, what would you spend it on? Come up with a list of importance of things you would spend money on.
  • For monthly bills (rent, utilities, etc) split the costs in half and put that amount aside each bi-weekly budget period.
  • You really need to nail down your living expenses so you know exactly what you need to cover.
  • Again, this is a short-term problem. When you have a stable, and higher, income when you graduate you will be in great shape. You will have a budget and know what you spend your money on.

Our second question comes from listener Mary

My name is Mary and I live in northern California. I am married with two kids age 5 and 7.
My husband and I are recently out of debt and working on an emergency fund. We just received an inheritance of 80,000. We would like to maybe buy a rental or some other investment that honors the family member who gifted it to us. Do you have any advice for us?

  • The first thing you need to do is establish an emergency fund. 3-6 months worth of expenses that doesn’t get touched for anything other than an emergency
  • Before buying a rental property, we would put money into the kid’s college accounts.
  • Are you totally out of debt (house, car, etc) or just credit cards? If not totally debt free, we would put that money onto any outstanding debts.
  • Put money into retirement accounts or mutual funds (401K max is 18k and a Roth is 5,500)
    • Quick example: If you both max out your 401 and Roth IRA for the year and put 20k to an emergency fund, you are left with 13k.
  • The best way to honor a gift like this is to build your personal debt so that you can provide fully for your family and one day be a gift to someone else.


  • If we were planning on using this money for a rental we would want to have the following things met:
    • Is your home that you live in is totally paid for?
    • Can you buy the rental outright with the money you have?
    • Do you have the time and resources to maintain the rental?
    • What do rentals rent for in your area vs. how much is the mortgage


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