5 Tried-and-True Strategies for Saving When Your Income Isn't Consistent


If you’re a freelancer or a contractor, then you know that work seems to come in “feast or famine” cycles. One week, you have more to do every day than 24 hours could possibly hold. The next, you’re twiddling your thumbs.

Unfortunately, living with this cycle means that your income isn’t consistent, either. In fact, if you’re not careful, you can end up without enough to cover food or rent when, just last month, you could have paid for it all several times over.

To make up for this wave-like income cycle, it’s important that people with inconsistent income learn to save. This means that you’ll not only be protected if the checks don’t come one month, but that you’ll be able to have money for retirement.

While saving when your income is inconsistent is hard, too, there are ways to do it effectively. Some of these are new, while some have worked for independent workers down through the years. (See also: 3 Invisible Savings Tips That Work)

1. Save a portion of each check

Pick a percentage, and save that much of any check you receive, no matter how small. Sure, 10% of $100 is only $10, but 10% of $1000 is $100. Over time, even the little bits will add up until your savings is significant.

Pros: You’re always saving. As your business grows and you get more and more checks, your savings will grow, too. Over time, this becomes almost mechanical, and you won’t have to think about it.

Cons: If you’re struggling to live from check to check, this might be impossible right now. In that case, make it an ultimate goal to work towards.

2. Save half of all your large checks

Don’t bother saving when you get small checks, but save 50% of each large check that you get. Of course, you’ll have to determine what qualifies as “large,” and then stick to your plan.

Pros: When you get large checks, your savings will grow significantly. You'll feel like a saving god.

Cons: You don’t get to spend nearly all of the large checks you receive. Also, if one large check is the only check you get in a month, it might be hard to part with half of it.

3. Save first

No matter how you choose to save, put money into your savings accounts (or investments, IRAs, etc.) first. That way, you don’t risk spending it before you realize where it’s gone. This is especially important when income isn’t consistent, as you’ll be more tempted than ever to hold on to the money that comes in, just in case.

Pros: You make sure your savings gets its portion. This is also good for self-discipline in general, as it helps you defer gratification.

Cons: When bills are pressing, it’s hard to discipline yourself to save first. And if you have more bills than money, then it doesn’t make sense to put money in savings, only to move it directly back to the account you’re spending from.

4. Automatically round up and save the difference

This program started with Bank of America’s Keep the Change program. Basically, it automatically rounds all of your purchases up to the nearest dollar and deposits whatever isn’t necessary for the purchase into your savings account. If you don’t want to sign up with them, you can do this yourself.

Pros: Savings is automatic, so you don’t have to think about putting money away. Thus, you generate savings even when money is tight, and you don’t have to put your savings away as a lump sum.

Cons: It will take a while to generate a significant savings if this is the only way you’re attacking the problem. It can also be a tedious process if you’re trying to do it yourself.

5. Set savings goals

No matter how you choose to save, it will help to set some savings goals. This will give you a target, and you’ll be able to judge your success or failure easily. Decide how much you’d like to have, whether it’s for a vacation, an emergency fund, or your car replacement fund, and write down the amount somewhere where you’ll remember it and see it often.

Pros: You have motivation to save. You know where the money you’re saving will go, and what you’ll be able to have once it’s all there.

Cons: When you income isn’t consistent, it can be hard to know what a reasonable savings goal is. While you can work towards any goal slowly, it might be more frustrating than motivating if you aren’t able to get where you want to go.

How have you successfully built up a savings account when income wasn't consistent? What worked for you?

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Guest's picture

That's not really the way it's done.

You pick a "owners draw" of "X" dollars. Let's use $ 1000 a week.

If you bring $ 6,000 this week after expenses, you draw $ 1000. The rest goes into savings (retained earnings). And the end of the year, you decide to give yourself a raise, or invest the money in expansion or productivity, or give yourself an "Owner's bonus".

Sarah Winfrey's picture

Not how it's done, huh? Funny, because these strategies have been working for me for years. I think the idea you present here is good, too (unless you never make more than your owner's draw, in which you'd never save anything). Truth be told, it's impossible to cover all the good strategies for saving in one article, and so I'm glad you spoke up. It might help you to remember, though, that there's rarely just one way of doing something and doing it well.

Guest's picture

I always find this as a challenge. Managing money is one of those tasks that is easier said yet so hard to do. But with this tough course, I still try to figure out how much I’ll have to save per paycheck to attain each of my savings goals. Temptation is my worst enemy but I have come to develop my discipline in resisting the urge to spend too much of my money. Practice living life with the basics and simple things. I stopped using credit cards and trim my expenses like cutting down cable TV (anyway, I can live without it). Surely, you can't save with just a snap but sometimes it really takes time to make great things happen.

Guest's picture

Saving money can be had when you are living paycheck to paycheck, but like you mentioned. Having it as an end goal is a good way to start. I used to be able to save $100 a month, but now it's very difficult. I try to limit dining out and other frivolous activities as much as possible.

Great post!

Guest's picture

Great post. I'm glad you addressed this. I think inconsistent income makes it harder for people to automate their retirement savings and save financial goals period. I like how you set some guidelines. I think it will take discipline on the persons part to put the money where it needs to go. Maybe they could even set a very low number to be put away automatically as if it were a fixed "bill" every week and then add to it if they make a great deal more.

Everyone is different and has to do what is best for them and you provide different options.

Guest's picture

Saving extra money from raises, and bonuses is the probably one of the easiest ways to accomplish some added savings. Just get used to what you make now, and regardless of inflation, just keep saving those extra dollars!

Guest's picture

i have a place i stash cash. then i take the cash out of my cash budget and live on the rest.

if i don't have money to pay a bill, i wait until i get more cash to pay it.

also then i have to find more ways to get cash.

if times are slow, i can pull out some of my cash reserves to get by, but it hurts so i avoid it.

Guest's picture

I find that a good way to save money when your income varies from month to month (I'm a student working part-time, different hours every month) is to set a stable spendings amount. But it has to be humble enough to be on average lower than your (expected) income.

Guest's picture
Money Doc (MD)

Everyone's situation is different but i aggree with all the suggestions

Guest's picture

Excellent observations. Work is rarely consistent and it would be so much more manageable if it was!!!! I think that saving each portion of a payment received is an excellent idea and can really tide you over in difficult times. I sometimes find that proactively talking to old clients that you have previously done work for is also really useful when work is slow at coming in.

Guest's picture
Christina D.

I wait tables and sometimes the money is VERY inconsistent. But what I started doing is everyday, after I cash in my tips for larger bills' any dollar bills I have left over I put in a pot at home. So I save 3 dollars one day, 4 thr next, I'll throw a five in every so often as well. At the end of the month I could easily have almost 100 bucks saved.and I don't even up missing those singles at All.