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How to pay the bills when your pay changes monthly

Updated: Jan 4

Updated post: 9/5/23

Original post: 2/10/23

Many of our parents taught us to save for a rainy day, using examples such as unanticipated vehicle repairs and medical emergencies. The financial turbulence many experience has evolved from unexpected expenses to significant changes in monthly income commonly referred to as income volatility.

Income Volatility

Income volatility refers to the fluctuations or variations in a person's income over time. This can refer to a range of factors, including changes in employment, hours worked, or salary. Income volatility can also result from external factors such as economic changes, job market conditions, or government policies.

High-income volatility can make it difficult for individuals to budget and plan for their financial future and contribute to financial insecurity and stress. This issue is particularly relevant in the context of low-wage or gig economy jobs, where workers may experience more frequent and significant changes in their income.

Studies have shown that low-wage workers, in particular, are often subject to fluctuations in their income due to changes in work hours or wages. These fluctuations can result in significant swings in their monthly income, making it difficult for them to make ends meet and plan for their financial future.

For example, a study by the JPMorgan Chase Institute found that the monthly income of low-wage workers in the US can fluctuate by as much as 50% or more. Those with the median level of volatility, on average, experienced a 36 percent change in income month-to-month during the prior year.

How to pay the bills when your pay chances monthly

Another study by the National Bureau of Economic Research found that the average monthly earnings of workers in the bottom 25% of the income distribution can fluctuate by as much as 20% or more. These figures highlight the significant levels of income volatility that many low-wage workers in the US face regularly.

If you want to learn more about the income swings many everyday folks are facing, read the book Financial Diaries. The book's findings reveal that many low- and moderate-income households experience significant financial volatility and unpredictability, often relying on informal networks, such as friends and family, for support.


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How to plan for income volatility

Build an emergency fund

Having a cushion of savings can help absorb the impact of unexpected income fluctuations and provide financial security. Aiming for three to six months' worth of living expenses in an emergency fund is recommended.

Budgeting and tracking expenses

Creating a budget and tracking expenses can help families see where their money is going and identify areas where they can cut back if necessary. This information can also help them plan for future expenses and decide how to allocate their income.

Negotiating bills and expenses

Families can negotiate bills and expenses with service providers to reduce costs or find ways to make their bills more predictable, such as signing up for automatic bill pay or budget billing.

Diversifying sources of income

Diversifying sources of income can reduce the impact of fluctuations in any one source. This might mean taking on a part-time job, starting a side business, or seeking freelance work.

Building a safety net

Families can also explore safety net programs such as food assistance, child care subsidies, and tax credits, which can help make ends meet during income volatility.

Don't miss out on our free Money Marriage U Save course for couples. The course addresses in more detail challenges such as income volatility and the evidence-based strategies couples can use to manage financial turbulence. Receive the course for free by subscribing to our free bimonthly newsletter.


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Moffitt , R. A., & Zhang, S. (2018, March). Income volatility and the PSID: Past research and new results. Retrieved February 10, 2023, from

Yu, C., Farrell, D., & Greig, F. (2019, October). Weathering volatility 2.0: A monthly stress test to guide savings. Weathering Volatility 2.0: A Monthly Stress Test to Guide Savings. Retrieved February 10, 2023, from


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