Suffering from Irregular Income: 4 Ways to Manage It Better


When you have irregular income either from owning a business with considerable seasonality or because you make money from commissions or event bookings, it can make life tough. Planning for the future is harder, but even handling the month to month expenses has some challenges.

Here are 4 ways to manage your income better.

1.      Cover Income Shortfalls with a Loan

When your business income has declined due to seasonality or lower bookings and you have insufficient savings to tide you over, what can you do?

It might be worth taking out some short-term financing to cover the gap, which is then repayable quickly, rather than locking you into repaying it over multiple years. Payday loans in Illinois are a good example of this where they are available for up to 45 days repayment period. These types of loans can help smooth over a bumpy ride to make it a bit more tolerable.

2.      Diversify into Other Areas

It pays to diversify but still within your circle of competence. See if you can intentionally widen this circle to increase your options going forward even if it takes you six months to do.

For instance, while you may speak at management events, perhaps leadership conferences or career expos are worth venturing into as well. Giving a keynote speech at a career conference about what CEOs are looking for in small businesses might be perfect.

If you have previously specialized in one industry, look to find another couple of industries that you can begin to move into. Increase your knowledge in these industries by reading periodicals and learning the right jargon to prepare yourself.

3.      Cut Back Expenses to Save in the Good Months

It’s an odd thing, but when you have irregular income, it often results in spending more rather than less. The uncertainty when there is a decline but not an emergency doesn’t affect spending in the way that you think it would. This is often evident with people who get paid weekly versus monthly where the weekly salaried workers tend to treat themselves more than someone paid less frequently.

Do the opposite by adopting a more frugal spending plan. Save the increased difference to build a lump sum. Then at the end of the year, if there’s a good amount accumulated and there haven’t been any financial dramas, buy one or more luxury items at that point.

4.      Spread Out Expenses

Look for ways to spread the cost of expenses out over the next 6-12 months. Avoid paying for one year’s service up front where you can. While you may have to give up discounts for paying in advance, it’s still worth it because it provides greater flexibility until you can build up a financial reserve.

Once you have a financial reserve in place, irregular income is less problematic. Why is this? Because you can use the reserve to patch up a shortfall of income that month. Then when the income is higher than the baseline average, the increased savings rate replaces the part of the reserve that’s been used.

Irregular income is not easy to handle. However, when following the above advice, it’s still manageable as long as you pay attention to the details.


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