How to budget for an irregular income

If you’re self-employed, working on a zero hours contract or claiming Universal Credit, you might be dealing with a variable or irregular monthly income. This could make budgeting accurately seem impossible. After all, how can you budget when your monthly payments could vary? This page tells you more about how you can effectively budget when you have different amounts coming in each month.

Budget for your outgoings

Top tip

Try our free Budget Planner tool to start getting in control of your finances.

You might not know how much you have coming in every month, but you should have a good idea about how much is going out and this is a good place to start.

Make a list of all your important regular outgoings. This includes:

  • rent or mortgage
  • travel costs
  • mobile phone
  • electricity and gas
  • insurance
  • council tax
  • food.

This might not be perfect, but if you know how much is going out each month, you can budget based on how much is coming in. This is also a good way to identify ways you can cut back.

Find out how to start managing your money effectively.

Make sure you can cover regular bills

Once you’ve figured out how much you have going out, you need to be sure you can cover these costs every month. If not, you can easily be hit with charges for going into your overdraft, or face getting into debt.

If you’re worried about dipping into money earmarked for these bills, you might want to set up a separate account for your regular outgoings you can use to top up in a higher-income month. This way, you’ll always know the money is there to cover essential expenses.

Budget for your lowest monthly income

Top tip

If you’re claiming Universal Credit, try out our Money Manager tool to help you make the most of your money.

If you have a varying income, it can be tempting to budget as if every month will be a good month, but this can leave you short if you have a bad month.

A good tip is to budget for your lowest monthly income. This way, at least you’ll always have the major costs covered. Then, if you have a good month, you can revise your monthly budget up.

Alternatively, total up everything you had coming in over the last year and divide it by 12 to get an average monthly income and use this as a base mark for your income.

Think ahead

It’s important to factor in seasonal changes in income, particularly if you’re self-employed. In some industries, Christmas is a good period, while in others the holidays are a slow time, with little income coming in.

You also need to be aware of times when your outgoings will be higher, for example around Christmas, or in months when there are birthdays or annual bills, like car insurance, due.

Build up an emergency fund

If you have a good month, or a month when your outgoings are less than expected, don’t just splurge the extra cash.

Build up an emergency fund to cover unexpected costs and get you through times when your income might be lower.

A good rule of thumb is to have three months’ essential outgoings available, but even having a month’s income saved will give you a cushion to protect you against immediate income shocks.

How fluctuating income affects Universal Credit payments

If you’re claiming Universal Credit you’ll be paid a month in arrears and the amount you get will vary depending on how much you earned during your assessment period.

Your first assessment period starts on the day you make your claim and lasts one calendar month. You will usually get your first payment seven days after the end of your first assessment period. Your pay day is then fixed on the same date each month - seven days after the end of your assessment period.

You’ll need to report any earnings from self-employment every calendar month. This needs to be done on the last day of your assessment period, even if you have no income to report.

Does my pay date affect my Universal Credit payment?

Different earnings patterns can have an impact on your Universal Credit payments, particularly if you get paid more frequently because of the way the pay dates fall within certain months.

For example, if you get paid every four weeks, in some months you might receive two pay cheques.

If you get paid every two weeks, there are some months when you’ll get paid three times.

If you get paid every week, sometimes you’ll be paid five times in a month.

When this happens, you could be pushed over the earnings threshold and receive no Universal Credit payment for the following month, or a reduced payment.

However, if you’re paid monthly, rules introduced in November 2020 mean that if you receive two salary payments in one month (perhaps because your payday lands on a weekend or public holiday), one will automatically be moved into a different assessment period.

This should mean if you’re paid monthly by your employer, you won’t have any assessment periods without a universal credit payment. You don’t have to do anything to make this happen but you can let your work coach know if you know in advance.

If you live in Scotland or Northern Ireland and are getting fortnightly payments, then both payments will be reduced equally if you are still entitled to Universal Credit.

You will then need to reapply for Universal Credit but you won’t need to make a new claim.

You will need to log in to your online account and confirm your details to start the claim again.

Make sure you look at a calendar and check for months when this might happen so you can plan ahead.

Find out more about how different earnings patterns affect Universal Creditopens in new window on

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