Budgeting when income is not fixed: seasonal work, commissions and money from abroad
When income varies, plan around your weakest month, not your best. Put all income into a buffer account and pay yourself a fixed “salary” from it each month. A good month fills the buffer, a weak one drains it, and essential expenses get paid first.
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Why is budgeting with variable income hard?
Classic budgets start from a known monthly income. If you work seasonally, on commission, as a freelancer, or receive money from relatives working abroad, income arrives irregularly.
The risk is twofold: in good months you spend more, and in weak months you cannot pay for the essentials. The answer is not a stricter plan but a plan with a buffer.
Step 1. How do you find your baseline month?
Add up your income for the last 6–12 months and find the lowest amount and the average. Your baseline is a cautious figure, between the minimum and the average, that you can reach almost every time.
| Month | Income | Against the average (10,000 lei) |
|---|---|---|
| January | 8,000 lei | −2,000 lei |
| February | 14,000 lei | +4,000 lei |
| March | 6,000 lei | −4,000 lei |
| April | 12,000 lei | +2,000 lei |
The four-month average is 10,000 lei, but one month dropped to 6,000. Had you spent 10,000 every month, March would have left a gap.
Step 2. What is a buffer account and a fixed “salary”?
Open a separate account where all your income lands. From it you transfer yourself the same amount on a set day each month and treat it as a salary. Pick an amount below the average.
In the example above, a “salary” of 8,000 lei leaves 0 lei in the buffer in January, 6,000 in February, then −2,000 in March and 4,000 in April. After four months the buffer holds 8,000 lei, and the weak month passed without panic.
Step 3. In what order do you pay?
- Essential expenses: housing, utilities, groceries, medicine.
- Fixed obligations: loan payments, insurance, taxes.
- The buffer and emergency fund, until they reach their target.
- Everything else: wants, holidays, goals.
If a month does not stretch to everything, the order tells you what gets paid and what waits.
How do you count money sent from abroad?
Treat it as variable income. Do not spend the amount before it arrives, and do not build it into your baseline if it is not certain.
Log the receipt in lei at the day’s rate and also keep the amount in its original currency, so you can see later how the exchange rate moved. Talk openly as a family about how much of this money goes to everyday costs and how much to savings.
What do you do in the good months?
- Do not raise your lifestyle straight away. More income in one month does not mean the same income every month.
- Put the surplus into the buffer first, until it covers 2–3 months of “salary”.
- Then split it between the emergency fund, debts and goals.
- Keep a small share for enjoyment; a plan without it does not last.
Frequently asked questions
How big should the buffer be?
A good start is the gap between your “salary” and your weakest month, multiplied by the number of weak months in a row you have lived through. Then adjust with experience.
What if the fixed “salary” turned out too high?
Lower it by a small amount and hold the new level for at least three months. Better small and steady than large and changed often.
Do I pay taxes from the buffer?
If you earn on your own account, set aside the tax share as soon as you are paid, in a separate place. Do not spend it from your “salary”.