Strategies to Build Wealth with Irregular Income

By Huyen Nguyen

5/28/20242 min read

If you are a contractor, freelancer, or business owner, you are likely to have an irregular income. The flush of money can feel exhilarating and overwhelming. It takes extra discipline to manage your money and build wealth consistently. Below are some approaches to help you grow your wealth.

1. Master the Fundamentals: Spend Less Than You Earn

No matter how high your earnings are, if you can't control your spending, building wealth will be difficult. Always aim to live below your means. This fundamental principle ensures you have surplus funds that can be saved and invested, setting the foundation for future wealth.

2. Pay Yourself First and Automate It

One of the best ways to ensure you save consistently is to automate your savings. Set up direct deposits so that a percentage of your income goes directly into your savings account every time you get paid. By prioritizing saving, you make it into a habit and reduce the temptation to spend money impulsively.

3. Invest in a Diversified Portfolio for the Long Term

Saving money alone is not enough. The vehicle to build wealth is investing. Even with small amounts, investing can significantly grow your wealth over time. Consider this: if you save just $100 per paycheck and invest it in a stock portfolio with a 7% annual return, you'll have $265,317 after 30 years.

For example, a consultant makes most of his or her money in five months of the year. Let’s say he or she commits to saving 10% to 15% of income during those months. That amount equates to saving $15,000 annually. With an 8% annual return, this disciplined approach can grow his or her savings to about $1,700,000 after 30 years.

4. Build an Emergency Fund and a Buffer Account

With irregular income, having financial safety nets is crucial:

  • Emergency Fund: This should cover 3 to 6 months of living expenses, reserved strictly for unforeseen emergencies like car repairs, medical bills, or home maintenance, etc.

  • Buffer Account: This account should have enough money to cover for living expenses in the months with little or no income. For instance, the consultant in the above example should have 7 months of living expenses saved in his or her account by the end of the high-earning season. Treat this account like an employer’s bank account to make regular paychecks by transferring a fixed amount each month to your checking account.

5. I’m going to say it again: Invest Your Savings

To truly grow your wealth, you will need to make your money work for you. Holding large amounts of cash in savings can be detrimental, especially in a high-inflation environment where the value of money decreases over time. Instead, consider investing in low-cost, diversified index funds, which are known for their steady growth and minimal fees.

Final Thoughts

Building wealth with an irregular income is not only possible but can be highly rewarding with the right strategies. By spending less than you earn, automating savings, investing wisely, and preparing for income fluctuations, you can create a solid financial foundation and grow your wealth steadily over time.

If this feels overwhelming to you, rest assure that you are not alone and I am here to help! Please feel free to contact me at 717-809-0505 or