Not everyone receives a fixed salary.
Some Nigerians are freelancers, traders, artisans, content creators, business owners or commission-based workers.
If someone’s income is ₦200,000 one month and ₦70,000 the next, using a fixed savings amount may not work.
Would saving a percentage of every income be better?
How do people with irregular income successfully build savings?
To successfully build savings with irregular income, especially when one earns different amounts each month, it is essential to adopt a flexible saving strategy that aligns with your income fluctuations. Here's a practical and easy-to-understand approach to consistently save money even when your incRead more
To successfully build savings with irregular income, especially when one earns different amounts each month, it is essential to adopt a flexible saving strategy that aligns with your income fluctuations. Here’s a practical and easy-to-understand approach to consistently save money even when your income varies:
1. Percentage-Based Savings: Rather than setting a fixed amount to save each month, consider saving a percentage of your income. For instance, if your total income is ₦200,000 one month and ₦70,000 the next, you could decide to save, for example, 20% of your total income each month.
2. Create a Budget: Having a budget is crucial, regardless of income stability. List your essential expenses like rent, food, utilities, and transportation. Allocate a portion of your income for these necessities, then determine how much you can comfortably save after meeting these obligations.
3. Emergency Fund: Prioritize building an emergency fund. Set aside a portion of your savings for unexpected expenses, ensuring you have a financial cushion during lean months.
4. Track Your Income and Expenses: Keep a record of your income and expenses. Tracking your cash flow helps you understand your spending patterns and make adjustments to save more during high-income months.
5. Automate Savings: Consider automating your savings by setting up a direct debit to transfer a percentage of your income to a separate savings account. This way, you prioritize saving before spending.
6. Adjust Savings Rate: During months of higher income, consider saving more than your set percentage to compensate for months with lower earnings. This way, you balance out the fluctuations in your income.
7. Cut Unnecessary Expenses: Identify areas where you can reduce expenses. By cutting back on non-essential items during low-income periods, you can redirect those funds towards savings.
8. Stay Disciplined: Building savings with irregular income requires discipline. Avoid the temptation to overspend during high-income months and maintain your savings discipline even when earnings are lower.
9. Adapt and Review: Regularly review your savings strategy. If your income patterns change over time, adjust your savings plan accordingly to accommodate these variations.
By implementing these strategies and staying committed to your savings goals, you can build a solid financial foundation and achieve your saving objectives, even with irregular income fluctuations. Remember, consistent effort and discipline are key to successful saving, regardless of income variability.
See lessYes, I believe saving a percentage of every income is much more realistic for someone whose income changes from month to month. If your income is irregular, telling yourself, "I must save ₦50,000 every month" can become stressful. You may earn ₦200,000 one month and only ₦70,000 the next. The betterRead more
Yes, I believe saving a percentage of every income is much more realistic for someone whose income changes from month to month.
If your income is irregular, telling yourself, “I must save ₦50,000 every month” can become stressful. You may earn ₦200,000 one month and only ₦70,000 the next. The better approach, in my opinion, is to create a system where every amount that comes in has a purpose.
For example, let’s say someone earns:
January: ₦200,000
February: ₦70,000
March: ₦150,000
Instead of saying, “I’ll save ₦30,000 every month,” they could decide to save 15% of whatever they receive.
January: 15% of ₦200,000 = ₦30,000
February: 15% of ₦70,000 = ₦10,500
March: 15% of ₦150,000 = ₦22,500
They have saved ₦63,000 in three months without forcing themselves to save the same amount every month.
But I would go one step further.
For someone with irregular income, I think it’s important to separate survival money, savings and investment money.
For example, whenever ₦100,000 comes in, they might use a simple structure like:
50% → essential expenses
20% → emergency savings
15% → business/work expenses or reinvestment
10% → long-term investment
5% → personal/flexible spending
Again, these percentages aren’t fixed rules. Someone with higher living expenses might need 60% or 70% for essentials.
The principle is what matters.
What happens when income is very low?
Let’s say you normally earn ₦100,000 but this month you only make ₦40,000.
Don’t say, “Since I can’t save ₦20,000, I’ll save nothing.”
If possible, save something.
Even ₦2,000 or ₦4,000 keeps the habit alive.
Then when you have a very good month, you save more.
For example:
January: ₦70,000 income → save ₦7,000
February: ₦200,000 income → save ₦30,000
March: ₦50,000 income → save ₦5,000
April: ₦250,000 income → save ₦40,000
The good months help compensate for the weaker months.
I would also create a “salary” for myself.
This is something I think can really help people with irregular income.
Suppose someone makes ₦600,000 in a very good month.
Instead of immediately increasing their spending because they have ₦600,000, they could put part of it aside and give themselves a controlled monthly allowance.
For example:
They receive ₦600,000.
They keep ₦200,000 as business/emergency reserve and use the remaining ₦400,000 to support their expenses over several months.
Then if the following month they make only ₦70,000, they don’t suddenly have to panic.
The good months are helping to fund the bad months.
That’s the advantage of building a financial buffer.
And I wouldn’t invest before building some savings.
If income is irregular and you have no emergency fund, I’d prioritize building that safety net first.
Imagine you earn ₦200,000 this month and decide to invest ₦50,000.
Then next month your income falls to ₦50,000 and your rent, transport or other urgent expenses come up.
You may end up selling your investment or borrowing money.
So I’d first build a small emergency fund, perhaps ₦50,000, then ₦100,000, and eventually work toward several months of essential expenses.
After that, investing becomes much easier because you’re less likely to disturb your long-term investments.
The biggest lesson for irregular earners
I don’t think the goal should be:
“I must save the same amount every month.”
It should be:
“Every time money enters my hands, I must save something before I spend everything.”
Some months it may be ₦5,000.
Some months ₦20,000.
Some months ₦50,000.
And if one month is extremely difficult and you can only save ₦1,000, that’s still better than completely abandoning the habit.
The most important thing is to avoid allowing your lifestyle to rise every time your income rises.
If you earn ₦70,000 one month, live reasonably around that level.
If you suddenly earn ₦300,000 the next month, don’t immediately start behaving as though ₦300,000 is your new normal.
Use the good months to strengthen your financial foundation.
Irregular income requires flexible saving, not irregular discipline.
That distinction is very important.
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