How to Budget for a Fluctuating Paycheck

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Working a fluctuating, hourly schedule has distinct benefits and drawbacks. Receiving different and unpredictable paychecks can be one of the biggest challenges of hourly positions, but savvy budgeting can help you to overcome this challenge. Budgeting for a fluctuating paycheck can be approached in different ways, such as using a work schedule to budget for near-term income or using a running average and saving money in higher-income periods.

Using an Hourly Schedule

Calculate your hourly wage. If you are paid hourly, this step is simple. If you are paid daily or on a piece-work basis, divide the average amount you are paid each day by the average number of hours you work each day to determine your average hourly wage.

Obtain your work schedule as early as possible. Rather than waiting until your next work shift to write down your upcoming schedule, do it as soon as the schedule is posted. The sooner you know your upcoming schedule, the sooner you can estimate your expected earnings during that period.

Understand how pay periods work. Ask your manager or a human-resources representative to explain how payments are calculated for payroll. You may find that each paycheck represents a 14-day period ending seven days prior to the check being written, for example. This means that each paycheck does not represent the work you've done in the past seven days, but rather in the two weeks prior to that.

Use your upcoming work hours or days to estimate your pay as far out as your schedule covers, using your average hourly compensation rate. If your schedule reveals that you will work 68 hours over the next pay period, multiply your hourly wage by 68 to determine your expected income for that period.

Using a Running Average

Track your daily, weekly or monthly pay over several months. If you are paid by check, save your check stubs to help in the calculation. If you are paid via direct deposit, obtain a bank statement for the deposit account to identify and track paycheck income.

Calculate an average income figure for the same period that you used to track income. For example, if you tracked weekly income for eight weeks, add all of the weekly totals and divide the sum by eight. If you tracked daily income for the same period and you work five-day weeks, add all of the daily totals and divide the sum by 40.

Use your average income figure to budget for your upcoming income. By using an average figure for your budget, you will find that your income is higher than your budget in some periods, and lower in others. Save excess money in higher-income periods to carry over to lower-income periods to avoid falling under budget. For example, if your average income (and budget) are $500 per week, you may find that one week your income is $650, while another week it is $350. In this example, you could save the $150 surplus from the better week to stay on budget during the worse week.

Perform your average calculations regularly, using the same time period, to keep up with changes in your income trends. Using a running average in this way can keep your budget as close to your actual income as possible at any given time.