For everyone who’s got a side hustle, relies on fluctuating passive income, works on commission, is self-employed or earns an hourly wage, this article is for you.

Mastering your money when your income is bouncing around involves some math and a healthy psychology toward money.

When times are good, my step-by-step plan offers the opportunity for you to save more, which will help tide you over when there are leaner moments in your cash flow — that is, when you have a slower sales month.


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Step 1: Set up the right accounts

One of the biggest mistakes I see people with fluctuating incomes make is disorganization. That can cause them to fall behind on the key saving, investing and debt benchmarks that lead to financial security and retirement readiness.

You’ll need the following accounts:

  • One low-to-no fee chequing account for day-to-day banking where your fluctuating income will be deposited.
  • One savings account for big-ticket items like foreseeable repairs or a 2022 vacation. This can also be the place you store your income tax money if you don’t have business accounts. (If you receive non-T4 income, be prepared to pay applicable taxes.)
  • One savings account for emergencies.
  • Tax-advantaged investment accounts (TFSA and RRSP).

Step 2: Follow the millionaire mindset for budgeting.

This applies to all Canadians, but is particularly important if your income is irregular.

  • Pay yourself first. Put five per cent of your income toward savings (split between the two savings accounts suggested above) and put 10 per cent toward tax-advantaged investment plans for retirement.)
  • Pay others. Put 75 per cent toward expenses like housing, child care, groceries and debt.
  • Spend the rest joyfully. Put 10 per cent toward what makes you happy. Joyful spending is linked to better mental health, less hoarding and debt.

Whatever your monthly income is, the proportions will largely remain the same. If times are lean, you will be glad you followed this plan because you’ll have savings to cover any temporary shortfalls.

Step 3: Pipeline it!

Line up your sales and income projections on a spreadsheet for the next six months. Then, project your regular and one-off expenses for the same period. Organize your spreadsheet to align to the millionaire mindset — income, then savings and investments, followed by expenses and then joyful spending.

From this pipeline, you can start to see what your income and expense forecasts will be by month, and can take action if there is a rough financial patch approaching.

I get that projections aren’t reality until the money hits your bank account. But they go a long way in the financial planning process by helping you be strategic about generating income and putting that hard-earned money to good use.

If you’re running short every month in your pipeline, there are only two ways to fix it: make more money or reduce expenses. The first can take some time. Maybe you need to revamp your sales plan or get a second job. The second can happen quickly. Trim back non-essential expenses, renegotiate fixed costs and, if you’re simply living beyond your means, take a hard look at downsizing everything — house, car, clothing, kid costs and more.

Aaron Fransen, CFP®, CHS profile photo
Aaron Fransen, CFP®, CHS
CERTIFIED FINANCIAL PLANNER® Professional
Fransen Financial Inc.
Office : 604-531-0022