Nearly 3 million UK workers have unstable pay – budgeting tips for irregular incomes

One in seven workers in Britain – that’s about 3 million people - have unstable pay.  

This was the finding of a new study by the Resolution Foundation and Joseph Rowntree Foundation. It found that due to erratic earnings, workers in unstable jobs can earn at least 25% above or below their average wage for more than four months of the year. 

Inconsistent pay from casual work, seasonal jobs, variable-hour contracts and zero-hours contracts is leaving many struggling, putting them under financial pressure and relying on credit just to get by. 

Who’s most affected by unstable pay? 

Certain sectors make irregular pay more likely.  

Here’s the industries with the highest levels of unstable income:  

• hospitality – 27%  

• arts and recreation - 23% 

• retail - 16% 

• health and social care - 14% 

The Resolution Foundation said it’s ‘no coincidence’ that zero hours contracts are common in these sectors. 

The charity believes more needs to be done to improve living standards for people working in these areas, such as: 

• making universal credit more compatible with erratic pay 

• making low-income workers more financially resilient 

• encouraging employers to smooth out unstable pay for their employees 

Tips for budgeting on an irregular income  

Managing your money when your income is unpredictable and changes from month-to-month can be difficult. But better budgeting can help.  

Here’s some tips for budgeting when your income’s erratic.  

Work out your average income and spending 

Instead of trying to live month-to-month, calculate your average income and expenses for the whole year. Using bank statements, add up all your income over the last year and divide by 12 and do the same with your spending. This gives you a clearer picture of what you’re really working with.  

Then start logging your monthly income and spending. The more accurate your figures, the easier it will be to budget. 

Plan ahead 

Once you’ve got a figure for your average monthly spend, think about times when your costs are likely to be higher. Christmas, for example, is a notoriously expensive time, as are kids' birthdays and annual bills.  

Start by calculating how much you typically spend on costly occasions throughout the year. Once you have a total amount, divide it by 12 to determine a monthly amount to set aside. 

Ideally, this monthly saving will help you cover those bigger costs without needing to cut back on everyday essentials when these occasions arise. By planning ahead, you can avoid the stress and surprises that often come with these expense spikes, like at Christmas.  

Build up an emergency fund 

If you earn more than expected one month, or spend less, try to avoid the urge to spend it. Instead, put it away for those tighter months or unexpected costs. 

Use separate accounts 

Having separate accounts can help you keep track of your money. One account could take care of your regular day-to-day expenses and another could be for savings for the months when cash is tight. This is also a good way to stop you overspending during good months. 

Don’t get discouraged – keep budgeting! 

Budgeting isn’t easy, especially with an unpredictable income. But the more you practice, the more it will feel natural.  

Our free budgeting tool may make it easier. 

Get debt advice 

If, after creating a budget, you find the money you have coming in isn’t enough to cover your costs and you’re relying on credit to get by, it might be time to seek debt advice. We can: 

• check you’re getting all the benefits you’re entitled to 

• help create a realistic budget you can stick to 

• advise you on debt solutions