9 Budgeting Tips for Entrepreneurs with Inconsistent Income

I am not an advocate of “quit your job today and be a full time entrepreneur.”

The truth is that this ish can be hard and stressful! Personally, the toughest part about being a business owner is the inconsistent income.

As an entrepreneur, it’s important to understand money and have a budget in place for yourself and your business.

Here are my 9 tips on how to budget with an inconsistent income.


Know your “break even” number

How much money do you need to live?

Ok, that’s a dramatic question but seriously – how much do all your monthly expenses equal to?

Grab a pen and paper and calculate the following:

  • rent
  • utilities
  • phone
  • cable/internet
  • car note
  • insurance
  • student loans
  • credit cards
  • security
  • grocery
  • gas
  • savings
  • self care
  • miscellaneous
  • Netflix,

You may have more or less categories than this, but the point is to write out all your expenses and calculate how much money you need to cover all of them.

This is your break even number.

Now that you know this amount, you want to create a buffer – just in case a bill increases.

Take your break even number and add 10% (or more depending on how comfortable you want to be) to it, this is your new break even number.

monthly expenses = $2200

$2200 * .10 = $220

break even number = $2420/month

Live below your means

Now that you know your break even number, are there any areas that you can decrease your spending?

When I first started budgeting as an entrepreneur I downsized in a lot of areas. I changed phone service providers and car insurance companies. I also contacted my student loan provider and got on an “income based repayment program.”

It’s ok to negotiate your expenses!

Call your car payment company and ask to refinance, contact your internet provider and ask for a discount. Cut things out of your budget that aren’t essential.

It may be hard to part with your daily Starbucks runs, but while building your business it’s important to live below your means, so you are never in a place of stress on how to pay your bills.

Separate business and personal bank accounts

As entrepreneurs it’s so easy to overlook this step because your life and business are usually blurred together. But your business and personal finances need to be separated for many reasons.

Reasons to separate your accounts:

  • Taxes and expense reporting
  • Paying yourself a salary
  • Having a dedicated account/card for business expenses only

Separating your accounts will give you a clearer picture of the money you have and help you create a more realistic budget for yourself as an entrepreneur.

Pay yourself a salary

Speaking of separate accounts, pay yourself!

By paying yourself every week, two weeks, or month from your business account you are creating a regular income schedule for yourself.

From the start of your business, write yourself a regular paycheck – you are an employee of your business. This is why separate accounts are needed.

Prioritize your emergency fund

Always plan for a “worst case” scenario. There are times in business where you may not be making as much as you may need. Put yourself in a position to always be able to cover your monthly expenses.

Having at least 6 months worth of income in a SEPARATE savings account is a great start.

Making your emergency fund a priority is great for your exit strategy if you still have a day job and want to eventually quit. Also an emergency fund can come in handy when you unexpectedly have a low period in your business and need to make ends meet.

break even number = $2420/month

$2420 * 6 = $14,520 to prioritize saving in an emergency fund for 6 months of expenses

Your emergency fund should be in an account that is separate from your business and personal bank accounts.

Note: You do not have to put your tax money into the emergency fund account – I recommend having a separate account for your taxes as well.

Live off one partners income

This may not be an option for everyone, but if it is take advantage of it!

Living off your partners income requires a conversation and could come with a lot of downsizing and compromise.

The bright side is that you are free to build your business without stressing about paying the bills. However, with doing this, be strategic – if possible, use the salary you’re paying yourself to pay off debt, save, or contribute to your emergency fund.

Get a job or keep your current 9 to 5

This can be a part-time gig or just an extra way to make some quick cash if you’re ever in a pinch.

When I first started my business and things were unpredictable, I drove for Uber and Instacart to fill the gap for me to pay my bills. Building a business doesn’t require you to quit your day job.

If you have a 9 to 5, keep that income to fulfill your budget needs.

The revenue you make from your business can be used to:

  • pay yourself a salary (and pay off debt)
  • beef up your “emergency fund” (so you can eventually quit your job)
  • invest back into your business

Create an additional source of income (aka Diversify your income)

When I first began my business I started out as a photographer, then I started freelancing as a social media manager.

As a social media manager I had a “steady” source of income because I was paid in advance and knew how long my contracts were. I knew exactly when my next check was.

Having multiple streams of income can put you in a position to not worry as much about cashflow. Add a new business or service and see where it takes you!

Here’s a list of freelance jobs you add as an additional source of income.

Other sources of income could be:

  • Selling ebooks
  • Dropshipping
  • Real estate
  • Upsell your clients/customers
  • Network marketing

Have a weekly date with your finances

My last tip is to have a weekly date with your finances.

My “pay day” is Wednesday and that’s also my money date day!

Every Wednesday I sit down with my finance spreadsheet, bank account/statements, payment processors, and accounting software to go over my finances.

Here are a few things I do during my money date:

  • check my revenue for the week and month
  • review my expenses
  • pay myself
  • review and adjust sales goals
  • pay bills that aren’t on autopay

Key Takeaways

  1. While there is freedom and flexibility in entrepreneurship, the downside can be a lot of financial irregularities. Prioritizing budgeting as an entrepreneur can help you feel less stress and anxiety about money.
  2. Being clear on your “break even” number and making stocking up your emergency fund will create a buffer for you.
  3. Don’t hide from your numbers. Sit down each week and take inventory of your finances so there are no surprises at the end of the month.

How do you deal with irregular income? Do you have any tips to add?


xoxo, Kay

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