How High Yield Savings Accounts Can Help Manage Irregular Income

Not everyone has a steady, predictable income. Many business owners, professionals, and people who work seasonal jobs – such as teachers, farmers, tax accountants, or wedding photographers – may experience fluctuations in their income. And more than a quarter of American workers participate in the gig economy, earning some or all of their income through short-term contracts rather than full-time employment, according to the Aspen Institute.

As non-standard working arrangements grow in popularity, providing benefits such as more freedom, flexibility, and creativity compared to traditional jobs, it takes careful planning to effectively manage irregular income. If your paychecks are unpredictable, you can still achieve financial stability. Here’s how:

You probably know that a budget, or monthly spending plan, is important for managing your finances. But it’s difficult to budget when you don’t know the specific amount of income you can expect each month. That’s why it’s important to develop a monthly baseline.

Look back at your bank statements or other records over the past year and compute the average amount you earned each month. If you earned a total of $120,000, divide it by 12 to arrive at an average of $10,000 each month. Use this amount as your monthly income for budgeting.

Building a budget may be foundational financial advice, but it’s not always easy to do when your income is irregular. Using the baseline monthly income figured above, create a spending plan. Include your required monthly expenses first, such as mortgage or rent, utilities, food, insurance, and minimum required debt payments.

Next, make a list of discretionary spending, savings goals, and extra debt payments. For now, you may not be able to afford everything on this list during low-earning months but it’s important to prioritize and plan as you increase your monthly income and grow your savings.

Once you’ve established both your monthly income baseline and budget, you can open a high-yield savings account such as Growth Savings that provides competitive interest rates to help you meet your savings goals faster.

Growth Savings accounts from Forbright Bank offer an unlimited number of transfers with no account fees. It’s easy to set up recurring transfers, allowing complete flexibility over your dollars as you need them, which works perfectly for those with an unsteady income.

To see how much your savings can grow over time, use our savings calculator on the Growth Savings page.

Disclaimer: This article is for general information and education only. It should not be considered financial or tax advice.