How to budget when you are paid by the hour

I get paid by the hour as do many gig workers and hourly employees around the world. It can be hard to set up a budget that works for you. Here is how I set up my budget. 

Not everyone gets paid a salary. Like many workers around the world I get paid by the hour. With the rise of the gig economy and with more and more people going freelance or being offered 1099 contracts, Independent Contractors, more and more people get paid by the hour rather than a set salary. Not everyone works 40 hours every week to be able to assume what their paycheck might be, either.

When you have a fluctuating workweek OR on the flip side, extra money due to working overtime (especially if you get time-and-a-half or double-time) than it can make budgeting a bit more difficult.

As salaried employees are becoming less and less common and employees who work are not offered salaried positions, than this situation will become more and more common.

This means that not every month are you getting the same paycheck. Every month your income fluctuates- either a lot but certainly slightly. This is  a real challenge when trying to set up a budget as most budgets (and most bills) assume that you get paid the same amount every month. Whether you are paid on an hourly basis, or are required to work overtime

When your work and income is more fluid than your budget needs to be more fluid also. Sticking to  a set budget when you don’t have a set income is a sure recipe for disaster. You are almost guaranteed to not stick to your budget and just have one big financial mess on your hands. As we all know, having a budget that actually works is the number one key to financial success and security.

Although I am a personal finance writer I don’t love budgeting.  I don’t love figuring out where every cent has to go every month and I don’t love sitting and talking and figuring out my own money all the time. Its exhausting and I frankly don’t really have the time.

As a working mother with 3 kids and this very time-consuming blog hobby I don’t have extra hours to figure out a budget every month! I don’t have the time, patience or bandwidth to deal with it.

I get paid by the hour as do many gig workers and hourly employees around the world. It can be hard to set up a budget that works for you. Here is how I set up my budget. Click To Tweet

I have created a budget system for myself that is very set it and forget it. Creating a budget for myself, even though I am paid by the hour and do not have a consistent weekly salary and so cannot guarantee how much my paycheck will be, takes literally seconds. That is because I have a system that works and is easy to implement. Not only that but it is SIMPLE. Simple is the goal of everything these days. The simpler the better!

How to budget when you are paid by the hour

A few tips to navigate being paid by the hour:

  1. If you are exclusively paid by the hour and you have some leeway in how many hours you can work figure out how many hours you need to work to pay your bills, how many hours are ideal, and how many hours are an amazing amount. That way you can make decisions about how many hours you need to drag yourself in for, how many late nights or overtime hours you need to take, and whether you the amount of overtime you are working is too much! If you are under the surviving amount- then you kill yourself. If you are at the almost ideal- then you stay late. If you already worked an amazing amount you can take the day off if needed.
  2. You need to figure out what your minimum salary threshold is. This is the amount that you need  to make every paycheck in order to survive and live your life. If you cannot reach that based on your current hourly-rate and hours worked- then you may want to consider getting a new job, if possible, or starting a side hustle.
  3. If you have two jobs: one with a salary and one as a gig worker, then create your budget based on your salary as that is guaranteed. Then create a separate budget for your gig worker paycheck- this can be extra money and be allocated to anything that is above survival mode.
  4. If you have a job that has extremes in terms of hours that they give you- so some months are great and some are terrible then you have to figure out a way to create a really large buffer. This can either be a really large emergency fund, extra job that you can pick up, or maybe switching to another job (even if its part time to get some consistent income).
  5. Don’t forget that most workers who are paid by the hours are often not entitled to various benefits and other compensations. Therefore you may have additional expenses, such as time-off, healthcare, etc than salaried employees and you should factor that in to your budget.

How do you budget when your income is fluctuating all the time or you are paid by the hour?

Budgeting When Your Paycheck Is Not The Same Every Month

I use the Modern Envelope Budgeting System. So please read that post before this one- its the basis of how to budget using a zero-based budgeting system. I like that system the best because it ensures you actually stay in your budget. It’s really a budget that works. I also really like using cash for my discretionary spending because it really helps me stay in budget.

While credit cards have a lot of pros to them, I don’t like them for spending that I have to keep track of. I put my bills on a credit card because why not? But for grocery spending or splurges I like to use cash. Then there is no need to keep track of your spending. When the cash is gone then the spending is done. There is no going over budget and there is no constant calculating about how much I spend. I like to make things as easy and simple as possible!

Make sure that you are making smart choices with your money, especially in months when you make more so that you are able to get by in the months when you make less. Having a clear budget can help you be in control of your money, finances and financial future, even when it’s not an exact science.

Here is a step-by-step guide to help you figure this out!

Budgeting when you get paid by the hour:


  1. Add up all your monthly bills and round up. These are not usually negotiable so you want to make sure that these are paid first. No evictions or electricity cut-offs for you!
  2. Divide your monthly bills by the amount of paycheck you get in a month.  If you get paid bi-weekly or weekly you will divide your bills by 2 or 4 for each paycheck. So if rent and bills are ,000 but you get paid every 2 weeks, you would deduct $500 from each paycheck.


  1. When you get your paycheck-deduct 10% for charity. I try to be careful to always include charitable giving in my budget. Although I don’t make much, it is important to keep on giving to others regardless of my own financial situation. Obviously, I wouldn’t let my own kids starve but I do make sure charity is always in my budget. (I put my charitable giving into an account until I have enough for a decent donation or something comes up that speaks to my heart. )
  2. Deduct 15% (or 30% or 50%!) for savings. Put this in your savings ladder.
  3. Deduct your bills from the amount left after steps 2 and 3.
  4. Decide on a percentage for all variable categories (clothes, spurge, coming soon etc.) to put in your “envelopes”. The Modern Envelope Budgeting System uses bank accounts instead of actual envelopes to maximize savings and credit cards. For example,  I usually use 10% for each. Deduct that amount from your paycheck.
  5. The amount that you have left over is for food and discretionary spending. If this amount is too small than lower your contribution to your other variable categories.
  6. If you have paychecks that are truly feast or famine (some months you make significantly more and some months you don’t even make enough to cover bills you will have to put extra in feast months into your bills and food accounts. It will take a lot of self-control and planning but it can be done!

So the math looks like this:

Paycheck Amount









Savings Ladder



Bills and Rent






Coming Soon











The easiest way to calculate where everything goes is to use an Excel spreadsheet. I have an excel spreadsheet set up on my computer. Simply set it up with your desired percentages and your total bill amount. Every time I get my paycheck I place the paycheck amount in the blue box. The rest of the numbers self populate and I am done! Each amount is calculated for you.

I then transfer the amounts to the correct accounts and take out the food and discretionary spending out in cash (I always round down when taking out the cash and leave some dollars or cents in my bank account). This whole process take literally a few minutes and then I am done! There is no deliberating or agonizing.

I try to reevaluate every so often and any time something changes- a new bill, a realization that my kids are growing really quickly and constantly need new clothes etc. Obviously before and after any major life change than I reevaluate as well (new baby, new job, worldwide pandemic- you get the idea)

You can use my example above to help yourself get started.  Play around with it and work out which numbers work best for you!

This is really simplistic. I know. some of you may be scoffing at how pared down and simple this is. But, when you have a full and busy life than I don’t have time to be spending on my budget. The point isn’t to sit and budget all day- the point is to get a budget in place so I can go and live my life!

Are you clueless when it comes to your finance? The Basic Guide to Budgeting and Personal Finance will help you get started.


Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.

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