How to budget when your monthly income varies

[MeatPieWoman]

DH and I are self employed in a craft business. There is no pattern to how much money we make.
I have always found it tricky to budget as our income varies so much. Some months next to nothing another a few thousand.
We just about keep the bills paid by standing order.
Other expenses like food, petrol, clothes go on a credit card which we generally try to pay off in full ( might not manage it once or twice a year)

We can't be the only people with a variable income.

How do other people budget? We don't save as sometimes we don't know when the next payment will come in. For example if we are running late on a project the customer doesn't pay until it's finished, which is fair enough.

Can anyone think of ideas that could help us please? Other than getting sensible jobs.

Hi OP, just a suggestion, but could you save any extra income from one month to tide you over from one month to the next? It sounds like it would be helpful to have savings in your situation.

In terms of how much to set aside in savings, can you aim to have enough to cover one or two months’ worth of general outgoings (e.g. mortgage/rent, utility bills, food, transport and perhaps some spending for fun things)?

I used to be self employed and it was tricky! I had a current account and a demand deposit account. I used to move 10% of every payment, no matter how large or small, that came in to my current account in to my demand deposit account. I tried to keep my essential costs down to the bare minimum. They’d come from the current account. Any discretionary spending (clothes, make up, holidays etc) came from the demand deposit account. I’m sure there’s a better system of doing this. A friend of mine used to have a business account that everything came in to and she would then “pay” herself a fixed monthly amount from the business account so she was always getting the same amount in to her own account every month.

I suppose I could move 10% of everything into a savings account.
I'd like to have a fund which we don't touch. The temptation to borrow from a savings pot to tide us over is always enormous.

I already move 20% for tax so it's just a case of another account.

I pay myself a fixed sum, any excess stays in my business bank account and is paid back to me when needed by my company if I need to top up, although it helps my company owes me a director loan. I find the fixed sum gives me a bit of a stable base.