Financial Planning Strategies for Business Owners with Irregular Income

If you’re an entrepreneur, you’re no stranger to the thrill of the hustle, the freedom of calling the shots, and, well…the unpredictability of an irregular income.

Unlike the predictability of a steady paycheck, being your own boss often means navigating the ups and downs of income.

So how do you find financial stability with an unpredictable income? The key is bringing structure to the chaos. Here’s a fresh approach to help entrepreneurs stay secure and flexible, no matter how income fluctuates. For a deeper dive on how much to pay yourself as a business owner, check out our article, I’m a Business Owner. So, How Much Should I Pay Myself?

‍

The Pay-Yourself-First Method

If there’s one principle that makes managing variable income easier, it’s to always pay yourself first. In other words, set aside a portion of every dollar that comes in as “profit” and treat it as an essential part of your budget. This method keeps the essentials covered, so you can confidently ride out the months when income dips.

‍

Build Your Baseline Budget

A baseline budget It’s the minimum amount you need to live on comfortably each month, keeping you grounded even when business revenue shifts.

• Find Your True Essentials: Identify your baseline needs: rent, groceries, basic bills. This is what your personal income should cover, no matter what. Keep it realistic, yet not overly strict. A baseline budget isn’t about sacrifice; it’s about ensuring your essentials are met.
  ‍
• Calculate Monthly “Take-Home” Pay: Based on this budget, determine a reasonable amount to pay yourself every month. Having this stability in your personal income can reduce the stress of uncertain business revenue.
  ‍

‍Set Up a Business Buffer Account (Yes, It’s Essential)

A business buffer account is like an emergency fund, but it’s specifically there to cover your own paycheck on those quiet months. If you’ve ever had a month where you didn’t have enough to pay yourself, you’ll know just how valuable this fund can be.
‍

• Aim for Three Months of Pay: Start by saving enough to cover three months of your personal “take-home” amount. This gives you a cushion if revenue dips and ensures you can still pay yourself, even during a slow season.
  ‍
• Make It Separate: Keep this buffer account strictly for business purposes. It’s a security blanket for your business income and not meant for any personal unexpected expenses.
  ‍

Review and Tweak Every Quarter

Your business is always evolving, so your financial approach should too. Review your buckets, buffer, and pay every few months to keep everything in line with your goals.

• Adjust for Big Changes: Maybe you’ve increased your revenue or taken on more expenses. Adjust your allocations to match the new flow.
  ‍
• Plan for Taxes: Check your tax bucket and make sure you’re setting aside enough to cover upcoming taxes. A little quarterly check-in can save you from scrambling at tax time.
  ‍
• Celebrate Successes: If you’ve hit your income goals or had an especially strong quarter, use your “Profit Rewards” bucket to treat yourself. Recognizing these wins, even in a modest way, keeps the journey motivating.
  ‍

About Investrio:

Investrio is an all-in-one financial platform built for solopreneurs. From budgeting to debt management, goal setting to investment insights, we empower you to make confident financial decisions. Join our waitlist today and take charge of your financial future.