As a foster parent your income can change from week to week, or from month to month. It’s critical that you learn how to budget on an irregular income. The monthly stipend you receive for each child in your care comes and goes as they come and go. To add even more complexity, maybe you have a side job. Or maybe you’re working a job that pays commission. This can be a little tricky in your budgeting.
Maybe your income is not irregular, but you’d like to learn how to budget when paid every two weeks. Or sometimes you get an extra paycheck in a month. I know from experience this can be a little tricky and can take some time to get the hang of. I’ve been through all of the pay cycles: weekly, bi-weekly and monthly. As a working professional you sometimes get a bonus and need to figure out how to work that into your budget.
You’re going to need to manage your spending on what’s called an allocated spending plan. I’ll walk you through the process and show you how it works.
There are two basic types of budgets:
- Monthly or Weekly Cash Flow Plan – easy to use when you get paid the same amount each week or monthly.
- Allocated Spending Plan – better suited for multiple sources of income that come in at different times throughout the month.
Today, I’ll focus on the allocated spending plan.
What is an allocated spending plan?
Allocated Spending Plan – It’s a cash flow plan that lays out when and where you will spend your money based on when you receive your various income streams.
It works well if you are paid weekly, every two weeks or some odd combination in between. It’s also well suited for an income that is different every week.
What does an allocated spending plan look like?
This one can look kind scary at first glance. Don’t run away just yet. Take it one step at at time and you can get through it. Don’t try to swallow the elephant in just one bite. It takes a lot of small bites.
There are four basic elements to an allocated spending plan.
- Income per week or take-home pay. Add all income sources together.
- Budget amount in each category. Enter how much money from each week’s income will go into the different categories. Keep in mind, you’ll not necessarily have money in each spending category. That’ll depend on your personal situation.
- Amount remaining to be budgeted. As you work your way down the budget keep assigning dollars to budget categories until the remaining amount to be budgeted is $0. You need to assign every dollar a job or it tends to just disappear without you knowing where it went.
- Amount spent. As you go through the week you need to track the total amount spent in each category. This will ensure you don’t overspend or you may find you need to make some adjustments and move some money around in your budget.
Learning how to budget your paycheck on an irregular income using this type of budget looks a little intimidating, but it’s not really that bad. If you receive a different income each week you can enter the different amount each week in the Pay Period Income row. There is a separate column for each week of the month. If you’re learning how to budget when paid every two weeks you can enter week 1 data, skip to week 3 and enter that data, etc.
Give It a Try – Learn How to Budget on an Irregular Income
Budgeting can be intimidating, but all it takes to get started is to try to make your first budget. Remember, you can adjust if you need to.
- Create your budget.
- Monitor your spending.
- Adjust your budget.
I know from experience you won’t get it right the first time. It will take you about 90 days to get into a groove with your personal budget. It takes a few iterations to figure out where to put your money and how much goes in each spending category. I encourage you to try to create your budget. You can download your weekly budget planner below. There are also some good online budget planning tools available. Let me know if you have any questions on how to budget on an irregular income. Leave me a comment below.
Get control of your Money!
Download your free step-by-step checklist and budget worksheet that shows you how to set up your irregular income budget.