How to Budget an Irregular Income

Dave advises Rob on how he should budget an irregular income throughout the year.

QUESTION: Rob sells commercial real estate and makes one or two big sales that he has to live on for the entire year.  How should he budget the irregular income?

ANSWER: You need to set up a separate account for your living expenses.  That account should have one year’s worth of expenses in it and you need to pay yourself a monthly salary out of that.  You’ll have to live on a budget to do this.

In addition to that, you need 6 months of expenses as an emergency fund.