How to budget when your income goes up and down

Most budgeting advice assumes the same pay every month. If you're self-employed or on variable hours, you need a different approach.

1. Work out your bare-minimum month

Add up the costs you can't avoid: rent or mortgage, Council Tax, energy, food, travel, phone and minimum debt payments. That's your base budget, the number your income must cover even in a quiet month.

2. Find your low-month income

Look at the last 12 months and find your lowest-earning month or two (after setting aside tax). Plan your regular spending around that, not your average.

3. Pay yourself a salary

Have all income land in one account. Each month, move the same fixed amount to your everyday account, like a salary. Good months top up the business account; quiet months draw from it.

4. Build a buffer first

Aim for one to three months of your base budget sitting in the income account. Until it's there, any extra in good months goes to the buffer before anything else.

5. Take tax off the top

When a payment arrives, move your tax percentage to a separate savings account straight away. It isn't your money to spend.

6. Decide in advance what good months are for

Write down where surplus goes, for example: buffer, then emergency fund, then pension, then treats. Decisions made in advance stop a great month from disappearing.