How can you budget effectively if you have a variable monthly income every month?  What is a variable monthly income?  For example, let’s say you work on commission and your income varies from month to month?  Or what if you’re a restaurant server and your tips and/or hours vary each month?  How do you create an effective budget?  Is that even possible? Absolutely!

What I recommend is that you take and three-month average of your expenses and budget that amount.  So, let’s say for month one, you earn $4,500.  In month two, you earn $2,500.  And finally, in month three, you earn $3,500.  If you add those three months together, you have earned a total of $10,500.  If you divide that by 3 (three months), you get an average salary of $3,500/month.  That is the number you will use for your total budget.

In the month where you have your highest earnings, you will take the extra $1,000 you earned and put it in a savings account.  In the month where you have your lowest income, you’ll have that money to pad your budget.  In other words, you’ll use the $1,000 you saved to supplement your income.  While I know my example is simplistic, it should give you a good idea on how to create your budget.

Moral of the story:

Even if you have a variable monthly income every month, you can still create an effective budget.  It will take a little more math (and yes, math is a four-letter word), but it’s doable.