Smooth Out Irregular Wages

Millions of Americans earn incomes that vary from month to month and paycheck to paycheck. Whether you work on commission, an hourly basis or as a freelancer, it can be difficult to determine financial priorities.

Workers with a set salary know exactly how much they'll bring home and can plan accordingly. With a less predictable income, however, you must estimate your earnings. Using median yearly income as a baseline means half the time you'd be earning less than your estimate. Instead, pick a baseline that you won't dip below, except in the harshest circumstances.

Here's how to do that: Look over your past five tax returns and pick the lowest year. When it's time to plan your budget, divide total income from the bad year by 12 and use that value for your monthly income. Next, add up monthly expenses and compare that with income. If your income is lower than your expenses, find a way to reduce spending or risk getting in trouble in a down year.

A danger of unpredictable income is building up consumer debt. If you earn less than your baseline income in a given year, you may turn to credit cards to make ends meet. As soon as things look up, the No. 1 priority should be to pay down your balance -- even at the expense of savings. Why? The 3% interest you stand to gain on savings in a money market account is paltry compared with credit-card interest.