Updated on 12.21.09

Managing Money When You’re Paid Infrequently

Trent Hamm

Most of us are lucky. We’re paid every week, every other week, twice a month, or monthly, and this makes it easy to make ends meet each month.

Some of us, however, live different lives. Freelancers, for example, are paid on a highly irregular schedule. Many graduate students receive only stipends three or four times per year. During the gaps between these payments, there’s a great challenge to make ends meet.

We live with a foot in both worlds. I’m basically a freelancer, so I’m paid whenever income opportunities come along. My wife has a very steady job with a steady paycheck. Our solution is simple: we use her income to make sure the regular monthly bills are covered, and my irregular income is often used to save for our big goals and to pay things off much faster.

What would I do if Sarah became unemployed, though? How would we survive if we had income arriving less frequently than once a month – or perhaps far less frequently?

Here are some of the tactics we’d immediately put in place to handle such a situation.

First, my irregular income would no longer go straight into my checking account. Instead, I would deposit all of my income into my savings account, preferably not at my primary bank. Why? I would not want easy access to those large sums of irregular money. Knowing that I had a lot of money in my account would make it easier for me to justify purchases that aren’t really justified.

So, I’d likely open up an online savings account at another bank and make sure all of my initial deposits went there.

Second, I’d set up regular automated transfers from that savings account into my primary checking account. I would effectively treat these automated transfers as my “paycheck.” I’d likely schedule about two a month and the amount would be enough to cover my bills, a little to spend as I saw fit, and a little left over to keep as an emergency fund.

Obviously, the big question here would be how much I actually spend each month. Budgeting would become really important, as I’d need to know how much I needed for bills, how much I would spend on other things, and how much I would want to save as an emergency buffer.

Third, I’d make sure that I was always withdrawing less than I was putting in to that master savings account. That master savings account must never run dry. In fact, over any given period of time, the balance of that account should be moving upwards. Doing this would ensure that I wouldn’t be going broke any time soon, no matter what was happening with my employment.

That extra money serves as something of an emergency fund hedge against unemployment or a big drought between contracts. It can also serve as a very nice bonus for a future time when your financial life changes – you graduate, or you find some sort of long term contract.

Finally, I would tend towards hyper-frugality. That is, until I was very sure that I had a decent money buffer up against unemployment or other events. I’d live in a tiny place, have roommates (if at all possible) to share the rent, and seek out every free service I could.

This is what many graduate students that I was friends with back in the day did. They would eat at every possible free meal, lived with several other students at once, and often potlucked as much as they could. Their entertainment was often purely from the internet or found in a deck of playing cards.

Of course, it’s key to remember that such situations are often the “salad years” for a career that will grow into something more steady – and perhaps more lucrative. Graduate school is preparation for work that requires a higher degree. Freelance work often builds into something much more. Often, this situation is temporary (though temporary can mean many years, sometimes).

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  1. psychsarah says:

    As a grad student of many years, I will add that on more than one occassion, our entertainment comprised of going to the 24-hr grocery store that advertised “it’s fresh or it’s free” to search for things that weren’t fresh so we could get a replacement item free (it was rare and we weren’t taking advantage, I swear). We did it purely for some silly fun, but in retrospect, it was pretty frugal ;) Oh the things you’ll do when you have no money and no pride :)

  2. BD says:

    Welcome to my world. I’ve been doing this for the past 5 years now, since I’ve been unable to find full-time work in my field and have had to resort to freelancing (and picking up odd retail jobs whenever I can).

    And you are SO RIGHT about “hyper-frugality”. I’ve ended up selling or giving away much of my stuff that I’ve accumulated over 38 years, and now I’d down to just the amount of things I absolutely need for my freelancing, plus a few books and a handful of DVD’s. Everything fits into one room, so I can rent a room from someone which is much cheaper than having an apartment or even an efficiency.

    It’s stressful, really. And definitely not very easy to save very much long-term. Still, I try to put away a little bit into permanent savings with every paycheck I do get.

  3. Tracy says:

    Mid-career I sort of ran away from home to be a ski instructor. My pay became a bit irregular and was about 50% decreased. I worked in Tahoe and my friends and I had a bunch of tricks to have fun and food at a low price. For instance $1.00 beer happy hour with free appetizers at a local mexican restaurant. Buy at most two beers and make the appetizers dinner. Those are great memories, but I wouldn’t want to relive that now.

  4. Nicole says:

    We did this, and actually the end of our graduate school wasn’t as bad as the beginning because the hyper-frugality at the beginning allowed us a certain measure of income stability. The small amount we saved up on top of living expenses grew to a nice cushion and provided its own small income stream. By the time we graduated we had enough for a house down payment at our first job and has put away several years worth of Roth IRAs.

    My big breakthrough was the use of laddered cds, suggested by a friend who had worked as a bank-teller. The nature of the cd forced savings, we could ladder them so we would have enough money coming due when we thought we would need it. At the time, interest rates were pretty nice so we were getting a nice predictable (albeit tiny) income just from having money.

    We also were good at picking up free food (thank goodness for MBAs and their copious leftovers) and picking up additional income streams (being a test subject can give a little extra cash). A couple years we had free housing in exchange for work.

    If we had to do it now, we’d definitely consider TIPS as a vehicle rather than just laddering CDs because we have much more money than we did back then. Converting large lumps of money into a regular predictable income stream is key. Extra money beyond living expenses can continue going to the stock market for longer term stability.

  5. Noadi says:

    I’m in the same situation. While I’m paid frequently when my jewelry sells the amount I make per month can vary drastically. It’s very stressful at times. Right now I’m coming down off the holiday rush when I made more than double my usual income in November and December and focusing on the fact that my income is going to back down. It’s a lot of budgeting and planning but it has to be flexible because it changes so often. I feel much better now that I used a lot of the extra holiday money to bulk up my emergency fund as well as my regular savings account.

  6. Pizpo says:


    Would you benefit from doing exactly what you have described above regardless of your wife’s employment status? A year ago, I was making way more than I needed to live and I played around with the idea of pretending I was unemployed and making all of the drastic cuts that would come along with that and banking a ton of money. But, in the end, I did not do it. Now, I have just bought a house and cannot even consider playing that game.

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