Making a Fluctuating Income Work for You

by Jennifer Paterson & Saira Waters, Dollar Divas

Making a Fluctuating Income Work for You

Dealing with a fluctuating income can be a challenge for even the savviest individuals. Not knowing when the next dollar is coming in is an incredible source of stress, but with a little bit of time and effort, you can put that stress to rest for good. By following these simple steps, you can create financial stability even if your income is not so stable.

Step 1: Do a personal financial audit

To do a complete spending audit, you need to gather all your financial documents for the past three to six months. This includes all bank accounts, credit cards, credit lines, anywhere funds can go into or out of. Go through each transaction and slot it into a category, for example groceries, meals out, gas, clothing etc.  If you already have separate business and personal accounts, I would recommend doing this for both. The key here is not to leave out any transactions, even if it’s not the norm — include everything. There will always be exceptions and you need to be prepared for them.

If you have never tracked your spending, then this will be an eye-opening exercise. Most people are not aware of how much they spend and where they spend it. A complete spending audit will take some time so be patient with yourself. It might even be a good idea to split this task up into bite-sized pieces that you complete over a few days.

Step 2: Create a budget

Using the audit that you just completed, put together a liveable budget. The key word here is liveable. If you try to cut too much, it won’t be sustainable and things will unravel quickly. Make sure to include things like contingency funds and entertainment.

Now that you have your budget, you know exactly how much you need to earn in order to live comfortably, which leads us to the next step.

Step 3: Track your spending

This is a tough step because it is ongoing, and like any new habit, it can be challenging to train yourself. But if you can, tracking your spending will do three things. First, it will make you more aware of your spending, which will usually lead to a decrease in spending. Second, it will tell you if the budget you created is accurate and liveable. And third, if your budget is off, it will tell you where and how you need to adjust it.

The key with tracking is finding a system that works for you and sticking to it. It will likely take a couple of tries and that is ok. Everyone is different and a system that works for one person may not work for everyone. There are a lot of great online tools that can be used to make this a bit easier. Our favourite is It’s free and user-friendly. Whichever system you choose, you will get out of it what you put into it.

Step 4: Create Your Nest-Egg

Now that you know how much your life costs and you are a pro at tracking your spending, the next step is to create a nest egg. Get creative and stash away between three to six months of your life budget in a separate account. The purpose of this account is to be the source of the salary you pay yourself. Once you have this set up and running smoothly, then you won’t have to worry during the slow months.

Having a fluctuating income can sometimes feel like you are on a financial roller coaster. With a little bit of practice and patience, you can create stability. Be kind with yourself because this is not going to happen overnight. Establishing a system that works for you can take months or even years so don’t rush it.