Finance & Money
Building a first emergency fund on an irregular income
The standard advice assumes a steady paycheque. Where income varies, a different approach works better.
Most guidance suggests setting aside a fixed amount each month, which works when income arrives on a predictable schedule. Where earnings vary week to week, a fixed transfer either fails in a lean month or is set so low that it never accumulates.
Setting aside a percentage rather than an amount tends to hold up better. A proportion of whatever arrives scales automatically, and in a good month it captures more than a flat figure would have.
The first target is usually smaller than people expect. One recurring bill, held in a separate account, covers the most common reason a household takes on expensive short-term credit. Building toward several months of expenses is a later goal, not a starting point.
Keeping the money somewhere slightly inconvenient but not inaccessible is the practical compromise. A separate account at the same institution, with no card attached, is usually enough friction.
What to do next. Set aside a percentage of each payment rather than a fixed monthly amount, and make one recurring bill the first target.
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