Self-employed life is amazing: flexibility, creativity, and the thrill of working on projects you love. But let’s be real: The inconsistent income can sometimes feel like a rollercoaster. One month, you are bringing incredible amounts in. The next, you are wondering if you should live off ramen. So, how do you budget when every month looks different?

Let me tell you, it is totally possible to create financial stability even when your paychecks are unpredictable and here are the steps:

1. Start with a "Bare Bones" Budget

Instead of budgeting based on your highest-earning months (which can set you up for disappointment), start with your lowest average income month as the foundation.

• List out your essential expenses: Rent, groceries, insurance, utilities, and anything else you absolutely need.

• Make sure you can always cover these basics, no matter what.

• Also make sure that you put away about 30% of all your income for taxes, no matter what. We would rather have some extra money at the end of the year than figuring out how to pay the IRS.

• If you have any extra income, put it toward your business buffer account until you have at least 6 months of expenses saved.

• Wait until you manage to have a regular income for about a year before increasing your salary.

Think of this as your financial safety net, if you can survive on your lowest-income month, everything above that is a bonus, which you can pay yourself out at the end of the year and if you don’t spend it all at once (which you shouldn’t), you can use this to increase your lifestyle during the next year.

2. Pay Yourself a Salary (Yes, Even as a Freelancer!)

One of the best ways to create consistency is by paying yourself a steady paycheck, even if your actual earnings fluctuate.

Here’s how:

• Set up a separate "holding" account. Deposit all your freelance income into this account first.

• Decide on a fixed “salary” for yourself considering your business income, business expenses, and taxes. Each month, transfer that set amount into your personal checking account just like a traditional paycheck.

• During high-earning months, let the extra money sit in the holding account to cover lower-income months (or earmark them in your spreadsheet if you do not want to open another bank account).

This method helps you avoid the feast-or-famine cycle and makes managing cash flow so much easier.

3. Build a "Dry Season" Buffer Fund

Since you do not have a predictable paycheck, you need a bigger cushion than the average 9-to-5 employee. Aim for at least 6 months’ worth of expenses (fixed business expenses, which includes your salary) in a buffer fund.

• Keep it in a high-yield savings account so it earns interest but stays accessible.

• Start small: Take a part of every income to build this up over time.

• If you know of (seasonal) slow months, build an extra buffer on top for these months. I want you to have this buffer fund for unexpected dry-months or unexpected big expenditures.

A solid emergency fund means less stress, more financial security, and therefore less mental load which leads to better work results because you can focus on the important things instead of stressing about money.

4. Keep Business & Personal Finances Separate

If you are still mixing business and personal expenses in one account, please take this as your sign and change that in this moment.

• Open a business bank account for all your freelance / business income and expenses.

• Transfer the salary you pay yourself from this account.

• Use a separate account for personal spending – which is likely the personal account you have been using over the past years already.

This simple move makes budgeting easier, because you keep one budget for your personal life and one for your business, tax time less stressful, and helps you see exactly how much your business is making, and which numbers you might need to tweak.

5. Save for Taxes Like a Pro (So You Are Not Shocked in April)

Unlike traditional employees, freelancers and (small) business owners do not have taxes withheld automatically. To avoid a massive tax bill at the end of the year, set aside about 30% of every income for (estimated) taxes which are due on June 15th, September 15th, January 15th and ultimately the taxes for the year on April 15th. For details, please ask your accountant to avoid any penalties.

For a clear overview, open a dedicated tax savings account and every time you receive money (or when you are reviewing your finances), transfer immediately about 30% into that account.

Your future-self will thank you when tax season rolls around and you are already prepared!

6. Plan for Seasonal Income Fluctuations

Many freelancers have busy and slow seasons. Here is how to stay ahead: Identify your high-earning months and save extra during those times to build an extra strong safety-net for the times you already know will be slower.

7. Automate Your Personal Finances as Much as Possible

Take the mental load off by automating your personal finances as much as possible. Set up auto-pay for rent, insurance, and debt payments (if you have) so they are always covered. Automate your personal savings by transferring a percentage of every paycheck into your savings or investment account as soon as it hits your bank account.

Less effort, more financial stability, this is what we call a win-win!

8. Start Saving for Retirement

A lot of freelancers put off retirement savings because there is no employer-sponsored plan. But the sooner you start, the better – for your future-self AND your current self that saves on taxes.

Here are a few options:

• Roth IRA: After-tax contributions grow tax-free. If you take one thing from this paragraph, please start investing in your Roth IRA account. Even if you are making “too much” to contribute, please use the backdoor Roth contribution.

• SIMPLE IRA: Allows you to save to a retirement account easily.

• Solo 401(k): Perfect if you want to save aggressively and maximize tax benefits.

Even if you can only set aside a small amount now, consistency will pay off big time in the long run, starting is the most important action. Be aware, that transferring money to these accounts is not enough, you need to actually invest your money into e.g. ETFs within these accounts to make them worthwhile.

You’ve Got This!

Budgeting with irregular income is not as unpredictable as one might think. It just requires a different approach than what we hear from employed people. You need to see yourself as two people: The CEO who needs to budget for the business and pay their employee & the employee who receives a salary and budgets in accordance with their personal finances. By building a baseline budget, paying yourself a salary, saving for taxes, planning for business expenses, and anticipating slow seasons, you can create financial stability, even with unpredictable business income.