Budget for irregular income

Case study: Planning for an irregular income

Alex works in hospitality and has an inconsistent income. The café has busy months when Alex can make over $4,000 a month, but in quieter times Alex makes closer to $2,000 a month.

Alex has a number of financial responsibilities each month – their average monthly expenses are $3,300. This includes living expenses like groceries and bills as well as regular expenses relating to transport, recreation, and entertainment.

Because Alex’s income is not consistent, it is easier to meet expenses some months than others. Last year Alex spent most of their pay each month and really struggled to make ends meet when they had less shifts at the café and had to dip into their emergency savings.

This year Alex wants to plan to meet their expenses as they arise each month and continue to grow their savings account in case of further changes to their employment.

Activity

Alex needs to make changes to their spending and their income to more easily meet their obligations.

The graph shows Alex’s income and expenses over time. Select changes that will align Alex’s average transaction account balance with their expenses.

Select actions Alex can take to more easily meet their expenses:

Reduce transport costs by riding their bike once a week ($40 per month)

Regularly sell items they are no longer using ($50 per month)

Cancel their gym membership ($92 per month)

Reduce the amount they spend on clothing ($30 per month)

Use $150 from their savings account in April. Having an emergency fund to draw from can be more important when you don’t have a regular income.

Cancel one of their streaming services ($12 per month)

Reduce takeaway food ($80 per month)