Nearly 4 million UK workers are on flexible contracts – five budgeting tips for an irregular income

New research has revealed more than one in eight (13%) UK employees were working on a precarious flexible contract at the end of 2023. That’s 3.8 million people. The study by the Resolution Foundation looked at flexible contracts including:

• variable-hours contracts
• zero-hours contracts
• casual employment
• seasonal employment
• short-term employment

Workers on these kinds of contracts face considerable uncertainty and a fluctuating income, according to the thinktank.

Tips for budgeting on an irregular income

When you don’t know how much income you have coming in from month to month, it can be difficult to manage your money. But better budgeting can help. Our free budgeting tool may make this easier.

Here are our top five tips for budgeting on an irregular income:

1. Work out your average income and spending

Rather than trying to adjust your spending to the amount of money you have coming in each month, it makes sense to work out your average figures for an entire year. That way you can try and put money away in good months to get you through the bad ones.

Add up all your income over the last year and divide by 12 and then do the same with your spending. It may be tricky doing this in retrospect so just do your best using online bank statements etc. Then from today, start logging accurate monthly income and spending. The more accurate your figures, the easier it will be to budget.

2. Plan ahead

Once you’ve got a figure for your average monthly spend, think about times when your costs are likely to be higher e.g. around Christmas or when bills you pay for annually are due. Set aside extra for these months.

3. Build up an emergency pot

If you earn more than expected one month, or spend less, try to avoid the urge to splash out with the extra money. Instead, put it aside in case you have a bad month or unexpected costs.

4. Use separate accounts

When you’re budgeting on an irregular income, it can be useful to have separate accounts - one for money to cover your day-to-day expenses and one for cash you’re putting away for leaner months. This way you’ll be less likely to overspend during the good months.

5. 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 could be a sign you’d benefit from 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

If a debt solution is suitable for you, it may reduce your monthly repayments to creditors and even write off some or all of what you owe. Our advice is free. Some debt solutions are also free and for others there’s a fee. Debt solutions are likely to affect your credit rating.

You can get our help online 24/7 or over the phone during our office hours.