How to budget with variable income

Hi all,

I have been using a lot of advice gained from this site for a couple of months now, and have succeeded in knocking 1k off our debt. Remaining balance =2.5K:j

However my main problem with budgeting is the fact that my husband works on a comission basis and some months our income only just covers bills and food. In fact for the last 8 months or so this has been the case. Normally this time of year means larger pay packets for him but it dosen't look like that will be the case this year.:(

In our budget we don't count in clothes shoes etc, we get these when we have a better month but always feel guilty for doing so... In these leaner times I am wondering if someone can advise me how they manage to budget on a variable income??
Trying to tidy and clean while the kids are still growing, is like trying to clear snow even though it's still snowing
£2 coin savings= £6


  • I think that the first thing to make sure on, is that all your 'regular' monthly/annual outgoings, are all as low as possible. Check all the figures and see if there is any means of reducing them. Things like car tax, gas/electricity, phone, mobile costs etc etc

    If at all possible, can you put a little bit of money away each month, so that you have a bit of leeway on 'less money months' ?

    I'm sure that others have more thoughts on your questions. But, I'd certainly look at those regular costs to start with and see what can be reduced.

    Great news on reducing your debt, it's all going the right way.
  • jane130
    jane130 Posts: 809
    First Post Photogenic First Anniversary Combo Breaker
    I know exactly how you feel my husband is a taxi driver so our lean time is just starting , we are going to be broke until may when people start taking holidays and the airport runs start coming in.

    like you we wont be buying any shoes or clothes ( unless one of the childrne has a growth spurt)

    luckily we get child tax credits and that together with our child benifit just about covers our bills. we just really tighten our belts to pay our debt at this time of year.. the food we eat isn't great quality but it fills our tummies.

    this is getting a bit long winded but what i mean is try and keep your bills and debts paid out of your income that you are sure of each month and reduce outgoings elsewhere if you can.

    hopefully someone else will have more help for you AS I AM NO EXPERT .
    I am journeying to a debt-free life.
    Our estimated debt-free date is January 2040. I'm on a mission to bring that date closer!
    16/02/23 debts - £9556.38
    emergency fund - £00.00
    debt-free diary - Time to Face the music and deal with this debt once and for all
  • micheleen
    micheleen Posts: 1,636 Forumite
    Do you put money aside in the better months, as a buffer for the lean months ?
    If possible it may be better to work your budget out purely for a lean month, I'm sure the good folks (not me) here can come up with ways to reduce your monthly outgoings.
    :j The £2 CSC = £48 in carton
    £100 banked Mar 06
    V-Free : 4 weeks :)
  • Know how you feel.

    I used to have a salary and a bonus once a year so I was happy with loans and taking each month as it came.

    Nowadays, I am self-employed and even though I have a careful budget (all monthly Direct Debits and forecast annual bills accounted for ie car ins, mot's) I find it much harder to plan (buy the bigger stuff).

    So after allowing for all monthly. annuals divided up by 12 to give a monthly figure plus going out monies, the only thing I have not budgeted for is the big ticket stuff. Ie cars, holidays, building work etc.

    I feel 'comfortable' with maintaining six months equivalent of 'living comfortably' in the bank, the rest I earn can be spent or saved (long-term savings). A big point is... I now also avoid credit whether possible - as this would add to the monthlies cost.

    You can't beat having a regular salary, makes it easier to live with, but at least being self-employed has helped me to financially planning ahead.

    So to answer you question... I would add up all your fixed costs (use the totals of last year if necessary, ie gas, elec, phones, loans, general spend on phones etc) then have a good guess at the rest ie. car servicing, etc. If anything add 10% onto last years bills for 'over' inflation. Its better to have spare cash than have to find it later.

    Like you.... bugdeting for clothes, food, christmas etc can be hard so I guessed and hoped for the best. circa 500 for two people... food, going out and clothes and just about anything else not already covered.

    But to be honest I keep a daily eye on the budget (incoming against outgoing) and adjust if necessary.

    Probably the easiest thing to do is work out over the last 12 months what your worst six months were and then use this as the average for working out what you have left (per month) for clothes etc. Then the months you earn more could pay for the luxuries and better lifestyle stuff and not forgetting longer term savings. - hope this makes sense.

    What I dislike about my situation is not easily knowing how I need to put away for the taxman. But again I over estimate and then have a nice surprise when I've seen the accountant.

    Good luck!
  • Sleekit
    Sleekit Posts: 69
    First Post First Anniversary Combo Breaker
    I also have a variable income, so can sympathise. Added to that, I get paid four-weekly instead of monthly, so it's doubly difficult* to budget!

    What I tend to do is budget for a very basic pay four-week period, and anything over that is therefore a bonus. You could also try building up a fund in the good months to "pay" yourself a little extra in the lean months.

    *getting paid four-weekly does have its benefits - there's always one pay a year that no direct debits come off of so my salary is entirely mine!
  • £Ronnie
    £Ronnie Posts: 218 Forumite
    Thank you all for your replies.

    I am currently looking at all of Martins suggested pain free savings, ie, car insurance, gas, electric etc. But each one seems to take me so long to finalise, for eg did car insurance qoutes last week, but still haven't changed policy. My excuse is that with two youg children it is hard to get anything done, I am so tired by the time they go to bed, and I ahve finished sorting things around the house. But it's weak I know. Just need to pull thumb out!
    I have however cancelled many unnecessary direct debits, reduced shopping bill by two thirds and we don't go out now as we wasted a lot of money on this.
    Will crack on with reducing the above though.

    With regard to saving money in the good months to have spare for the bad months:
    We only started getting to grips with our finances in September, this was mainly due to many reasons for increases in outgoings and reductions in income, and a sudden realisation that our overdraft was getting bigger every month. However any spare money we have at the moment is thrown at reducing the debt, I want to get rid asap. Historically this time of year my husbands wages can increase to twice what he gets in a bad month, but for some reason it just dosen't seem to be happening this year. (Sales)( Is everyone now on MSE?) At the moment I feel that any money in, over and above bills/food isn't spare and we shouldn't be putting it away for clothes etc we should be clearing debt.

    We were really hoping that a few good months would get us back on an even keel, but its not to be it seems.
    I am going to crack on with reducing policies, utilities, etc and complete Martin's budget planner. I have had a brain block about this. In my mind you cant budget if you don't know how much you have, or will have. Will give it a bash and see what I come up with.

    Any other suggestions appreciated.

    Trying to tidy and clean while the kids are still growing, is like trying to clear snow even though it's still snowing
    £2 coin savings= £6
  • I really sympathise with you as i have a similar problem - my income comes in at different times of the month depending on bank holidays/weekends etc. My maintenance comes in calender monthly (which is a nightmare over holiday periods!!!), my child benefit comes in 4 weekly, my child tax credit comes in weekly. I have a spreadsheet to cover a six week period as this is the only way i can ensure there is sufficeint money in the account each week to pay the various direct debits etc. One of the things that really makes me mad is that the csa take the maintenance from my exs account on the 1st it then disappears into the banks black hole for 4 working days gaining interest then appears in the csa's account which again has to take 4 working days to clear onto my account!!!! So the banks gain at least 8 days interest on my money!!! :mad: :mad: I get by most months just! and when things are lean i sell unwanted items on ebay but i am rapidly running out of things to sell!! :eek: It is amasing what you can find to sell if you have a clear out- the loft is always worth investigating - if you haven't used something for at least a year do you really need it - like wise with childrens toys (raid their bedrooms when they are out and 9 times out of ten they don't even miss the toy). Due to benefit constraints i can't work without losing out financially so i raid bargains in the sales when i can and buy in advance things like childrens clothes (especially school uniforms) because you know they are going to grow so don't wait until you have to pay full price!!! Cooking from scratch e.g cakes is far healthier and cheaper - its amazing the savings you can make over bought products.
  • Hi I am self-employed and like you there was a growing realisation that I was sliding backwards financially, in fact I got in a real mess. All of the above advice is brilliant but what concerns me is that you sound a bit overwhelmed and down so that what should be a fairly simple thing to do like the car insurance becomes a massive thing. I was like that too and having four children and now being a singe parent know how easy it is to feel like that. I would also pay some attention to working out how you really feel and whether this exhaustion is normal for you. Some simple things can help your mood and make you feel more proactive. One of the key things with young children is to get out of the house with them into daylight for extended periods every day to low cost or free things even visiting friends and relatives, play schemes, the library, the park etc. A combination of the noise, boredom, lack of structure to the day and inability to get on with things with small children underfoot and the lack of stimulation that adult company gives can easily drive anybody down. So try to get out with them, walk anything that gets you out and seek adult company especially if you can get into a daily routine of this. This has the added bonus of not having to clear up after the children at home. Make things simple for yourself with a basic and fast housework routine to give yourself time to do the important things like loving your husband and children and managing the money. Rope even the small children in to helping as soon as they are around three. Could your husband do some of the phone calls for you? Is there any chance that in any way you could do some regular part time work (perhaps you do already) that would also help in a number of ways? I would also look at your time management there is a good book called Organising Your Life DK which is a good start and has a good chapter on crisis avoidance. Look at the jobs you seem to do over and over again every day like picking up and sorting out toys. I was ruthless and got rid of or put away toys that had a lot of small fiddly parts that took me too much time. The childen didn’t even miss them. Streamline everything like laundry, cooking, clothes storage and keep on trying - continuous improvement as they say at work. I have worked out a simple excel spreadsheet that enables me to calculate accurately how much tax and NI I should out away each month excluding expenses. The inland revenue web site gives details of tax rates and allowances. This means that the tax I claim back on expenses like fuel is a type of saving. Don't lose sight of yourself as an adult if you don't already then try and go out and spend some time alone with your husband and friends even if it means slowing down the debt repayment just a little. Finally with no money you can’t treat yourself so again thinking of low cost ways to do this and promising yourself little treats (hot bubble bath) when you have done thirty minutes of ironing and so on all helps. If you don’t work then think about whether you could be improving your qualifications and future pension in some way so that you don’t lose out in the long term. You have made a really good start well done.
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