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How to Handle Variable Income as a Contractor or Business Owner

Danielle Nava

As a professional rocking your career or side hustle, you may already feel like the boss of your money. After all, you’re pretty much solely responsible for what goes in and what comes out, right? But as many professionals know, that can also lead to a lot of stress, no matter how much you’re rocking your career, growing your side hustle, or how many years of experience are under your belt.

And if you’re a contractor or have a successful business, you have a few variables thrown in: taxes aren’t withheld, revenue can vary from month-to-month, and it always seems like there’s a new bill to pay. So how do you feel like you’re REALLY the boss of your money, rather than holding on to money for a while before it goes out the door again?

If that sounds familiar to you, let’s talk about what you need to pay attention to in regards to your  money and income, and what you can do to gain control.

Contractor Income: What You Need to Factor In

How many times have you been trucking along, thinking you’re doing pretty well with sales or client work, only to find out that you have a big fat bill to pay at the end of the month? Or — funny story — maybe you’re like a friend of ours who didn’t realize she had to pay taxes out of her 1099 income… and had a hefty check to pay at the end of the year. 

That’s why the first step to being the boss of your money is to figure out taxes, hourly contractor rates, healthcare — all the things that come out of your contract-based job or business income. This way, you can make sure that what you’re making, what you’re taking home, and what you owe (to the government, your healthcare plan, your workers, etc.) are all accounted for. 

Other things you need to pay attention to:

  • How much are you withholding for taxes?
  • How much are you paying yourself? (If you run a business, you need a salary)
  • Is your income consistent or does it vary? 
  • What are your total expenses for your business or side hustle? (office, employment, etc.)
  • What expenses are steady and which are variable? 

Once you have those numbers and you are for sure paying yourself a salary (nope, this is non-negotiable), you can finally have a better picture of what’s going in and coming out. You’ll also know exactly what to set aside each month to pay at least the non-variable expenses, like your salary, your office rent, your software costs, etc. 

How to Take Control of Your Income (Once and For All)

Having an accurate picture of your numbers is a great start. But what do you do to make paying those bills and saving that money easier? Here are some actionable tips that can help:


If you’re on a variable income, knowing your salary can eliminate a lot of stress. Even if it’s not what you want to be making right now, or you’ve never calculated a salary before, don’t skip this step. Talk to your accountant or CERTIFIED FINANCIAL PLANNER™ professional if you’re not sure what to do. 


Tell your money what to do and set up systems so it automatically does it. As your income comes in, have automations set up so that money immediately goes to work. This way, it all gets done without you having to do anything.

How do you do that? Create a “mothership” account where you have all your revenue come in, and then you’ll have “sub-accounts” that hold your salary, your employees/contractors pay, your taxes, etc. Whatever you know you need to set aside money for each month, quarter, or year, set them up and automate the withdrawals so that it’s totally off your plate. 

See how easy that was? This follows the Profit First model, which focuses on paying yourself (and your bills first) and then uses whatever’s left to float your business, invest in it, etc. 


Instead of thinking about all the money you bring in (the gross revenue of your business or contract) as money made, you need to start thinking about income as net income. That means you’re only looking at what you’ve got after expenses are paid, taxes have been contributed, and so on. It hurts a lot less to watch the money go out and you’ll have a much better idea of what kind of profit you’re making, which can help you raise prices, streamline processes, or decide to hire help. 

Even if you’re a professional working a traditional nine-to-five, we hope this blog has helped you get a feel for what you can do with the money that’s leftover on your paycheck. We think the tips are super valuable for getting your side hustle in order, too. You might just feel confident enough to make it your main hustle soon.

Our hope is that you can implement these tips into your life, work, or business today, so you can stop feeling so out of control — even if your income and expenses vary. It doesn’t have to feel so chaotic, y’all!

If you want to ensure you’re making sound financial decisions and giving your money the best direction, check out Wealth by Design DIY. It’s a DIY financial plan program that helps you organize your money, give it direction, and plan for the future — no matter what your income looks like. Plus, it’s way more affordable than a done-for-you financial plan!

There’s a lot of bad money advice out there.

What if you had a clear formula to help you figure out how much to save… while paying down debt and enjoying life? It is possible… when you know your numbers.
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