How to budget on an irregular income


Are you self-employed, living on benefits such as Universal Credit or working on a zero-hours contract and find yourself managing a fluctuating income each month?

You’re not alone.

In fact, a staggering 857,000 people in the UK are on zero-hours contracts while in Scotland more than 330,000 people are self-employed.

Not knowing how much you’re going to take home each week or month can make budgeting difficult and in turn, can have a major impact on your finances.

Something as simple as a quiet week for a taxi driver or a few cancelled appointments due for a hairdresser can be the difference between covering the cost of the bills or not.

However, despite the uncertainty of an irregular income, there are simple ways for you to make sure your money stretches as far as possible each month.


Create a realistic budget

Even if you’re unsure of how much money you have coming in every month you should be fairly certain of your expenses.

Having a list of all important regular outgoings is important and is the first place to start when creating a realistic budget.

List all of your essential living costs, including things like:

  • Rent or mortgage payments
  • Council tax
  • TV licence
  • Phone / internet bills
  • Utilities
  • Food
  • Transport

If possible, you should also calculate your average take-home pay each month, based on your hourly wage and the number of hours you typically work.

This will paint a picture of what you have left to play with for the rest of the month.


Set up an account dedicated to bills

At the end of the day, the most important part of budgeting is being able to cover the cost of your bills and avoid turning to your credit card or overdraft to get by each month.

If you’re worried about dipping into the funds earmarked for essential bills you may consider setting up a separate account for all of your regular outgoings.

Organising your outgoings can be made simple using online banks such as Starling Bank and Monzo with each allowing users the opportunity to manage their bill repayments and organise their finances with the press of a button.


Check if you’re eligible for benefits

Even though you are working you may still be eligible for benefits, so you should take time to check you’re not missing out on any additional income.

Some of the most common benefits available in the UK include:

  • Universal Credit
  • Tax credits
  • Jobseeker’s allowance
  • Pension Credit
  • Income support
  • Council tax reductions

There are several online resources you can use to figure out if you qualify for Universal Credit or any other benefit payment. You can visit the benefits section of the UK Government website, where you can use their easy Benefits Checker.


Know your Universal Credit payment dates

If you’re applying for Universal Credit, you need to take two things into consideration when planning a budget.

Firstly, you’ll be paid your Universal Credit payment a month in arrears and secondly, the amount you receive will vary depending on how much you earned during your assessment period.

The first assessment period begins on the day you make your claim and lasts for one calendar month. You’ll typically receive your first payment seven days after the end of your first assessment. Your payments will then be fixed each month.

You’ll be expected to report any earnings from self-employment every month on the last day of your assessment period – even if you have no income to report.

Plan ahead for quieter months

If you’re self-employed or are in seasonal work, it’s vital to plan ahead for quieter months.

In some industries, summer may be the busiest time of year while for others the run-up to Christmas is the real money-maker of the year.

No matter what you need to be prepared for quieter months and able to cover the cost of outgoings. It’s especially important to be aware of the times when your outgoings will be higher such as around Christmas, when you have a spate of birthdays or when you have a big annual bill due such as car insurance.


Prepare an emergency fund

It might seem easier said than done but the importance of having an emergency fund should never be underestimated.

A financial emergency can happen at any moment. From an unexpected household repair to redundancy, ill health, bereavement or a pandemic there are a whole host of reasons you may find yourself in need of fast cash.

So if you have a good month or a month when there’s a little extra leftover after your outgoings, avoid the temptation to splurge the extra and begin to build a savings pot for emergencies.


Ask for help if you’re struggling

If you’re worried about fluctuating income and making your financial commitments don’t be afraid to ask for help.

Talking about money, especially a lack of money, isn’t easy and something we’d all rather avoid but if you’re worried there is support available.

One conversation can help you find a solution to deal with your situation.

If you’re worried about debt, talk to Carrington Dean. Our experts are on hand to offer help tailored to your needs.


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