How to Budget on a Rollercoaster Income


Dear Mary: My husband has two jobs–he is an artist and a salesman. He earns commissions from both jobs so we never know what our income will be. I work part-time and am paid hourly. How can we possibly live on a budget? –Jenn P., Texas


Dear Jenn: The mistake many people who live with an uncertain income (or what I call “mystery means”) make is they spend whatever amount of money they earn as it comes in.

They multiply a good month’s income by 12 and figure that’s about what their annual income should be and then set their lifestyles accordingly. Then they starve during the lean months, allowing all the bills to go past due hoping that a good month will follow soon.

The secret to living on an uncertain income is to determine the very minimum you need to live each month. What dollar figure must your husband’s commissioned jobs produce so that when added to your part-time paychecks will allow you to pay all of your bills? Whatever that number is, let that become his new salary. 

Next, open another checking account and designate it as his holding account. Instead of putting his commission checks into your regular household account, from now on deposit them to this holding account. Once a month, write out one check from this account to pay him his salary. This is going to require a great deal of discipline because some months he will bring in more than the amount you’ve determined to be his salary. That’s good because you will have lean months ahead. Allowing money to build up in that separate account will become the reserve you need to pay him even during those slow months.

Being self-employed (or commission-based, which to me is about the same thing) can be either rewarding or horribly debilitating. It all depends on your willingness to be disciplined and to exercise great restraint during that occasional month when it feels like your ship has come in. Don’t believe it. Next month could produce little, if any, income at all. You have to learn to handle both.

Dear Mary: I would like to know your opinion of the American Express Pass reloadable card for teens. –Debbie, G., California

Dear Debbie: I am opposed to any kind of plastic for kids. Honestly, age 18 is about the right time to introduce credit and debit cards. Plastic is a privilege for financially mature adults.

Plastic confuses and skews children’s thinking processes. Cash, on the other hand, works like a dream. It’s real and you cannot spend more than you have. Teach your kids how to earn, save, give and manage cash. Those are the skills they need to learn so that they will be able to understand and manage plastic in the future.

I have written extensively about this in my book, Raising Financially Confident Kids, which also includes a fool-proof step-by-step plan that will help you to produce financially confident adults. I hope you will read it soon before you hand your child an American Express card. Keep an eye on your mailbox. I’m sending you a copy of the book. Enjoy!

Question: At what age do you think a child should be allowed to use his or her own debit or credit card? When did you get your first credit card?

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16 replies
  1. Tonya
    Tonya says:

    I got my older kids prepaid credit cards from our bank when they were teenagers; my is almost 14 and has had one for a couple years. If they want to buy something online, I transfer their allowance to their prepaid card. (Of course, all purchases have to be okayed by me.) If they don’t have enough money in it, the card is declined. Once the older ones got jobs, we canceled the prepaid cards and got them checking accounts and debit cards.

  2. Catherine Wood
    Catherine Wood says:

    My son is 18 and just graduating high school. He has no job and is just learning to drive a car. His “income” is $40 a month plus what he earns mowing and extraordinary helping out with friends and family members. His “job” is education. He voluntarily tosses all credit applications and vows to have no plastic until he has a steady income. We approve his decision.

  3. anonymous
    anonymous says:

    I got my first credit card when I was 18 and just starting college. My parents had a hard time discussing monetary issues with me and I’ve always had a hard time managing money. Well, being the ignoranamous that I was, I defaulted on it. 10 years later I’m still paying for it (figuratively speaking). I’ve learned the hard way to set my own budget, and plan ahead. It’s SOOO NOT easy but it’s better than dealing with collections! To use a clique: If I had known then what I know now……..

    • Tonya
      Tonya says:

      I got my first credit card the first year of college, too. I definitely wish I’d had some experience with credit before that.

  4. Judy Ryan Sizemore
    Judy Ryan Sizemore says:

    Wow, I sure wish some of these commenters (and Mary) were my parents! I was never taught how to use money or credit, and at 52 I’m playing catchup! I was given my first credit card at 18. A family friend was an executive for a very large retailer and he thought he was doing us a favor in helping us establish credit. But I didn’t know how to use it, and I married a money-challenged man too. But after 30+ years of living in debt, I’m happy to say we are saving, digging out and moving on up! Thanks for all the great advice. You have helped more than you will ever know.

  5. Diana
    Diana says:

    I was put on my parents credit card at 16 for emergency use only, and I never once used it. At 17 I got my first credit card after gaining positive credit from being a joint user on my parents account. Today and most of my adult life (age 38) I am debt free. I have never spent more than I couldn’t handle. My parents taught me very well how to handle money. My brother on the other hand is always broke and he’s older. When I met my husband 15 years ago, he was 40k in debt and had a previous bankruptcy. We paid all of that off in 2 years. I was taught to save before you play. I have also realized in the last few years that I really don’t need to have gifts at holidays and new clothing all of the time. After getting rid of half of my wardrobe including about 100 sweatshirts, I realized that I can live with so much less and to quit buying something just because it was cute. I can admire something now on a hanger in a store instead of building up a cache of my own. So now we have even more money to save every month since I have downsized my wants.

  6. leslie r
    leslie r says:

    when my son started driving,i let him use my car and i added his name to my credit card as an authorized user and made it very clear to him that it was only for emergencies. i thought it was important that he have it with him in case it was needed. he only used it for a non-emergency once (for a meal) and he told me and paid me as soon as he got home with cash he had in his room. he knew that if he messed up, he would lose driving privileges and since we live in california, car is king to a 16 year old. when he got a paper route when he was about 13, i took him tot he bank and he opened a checking account (i was surprised they let him since he wasn’t 18 yet) which he still has. when he was in college he got his own credit card but didn’t use it much – he preferred to use cash. he is now 36, bought a home a few years ago and is a saver. i got my first credit card when i was working after i had graduated college but that was back in 1966.

  7. C
    C says:

    I had an ATM card early, maybe 10, I also had a paper route and put my own money in that account. It was back when it was strictly an ATM card to withdraw money from my account, not a debit card. My son is almost 8 and he is eager to have a debit card. He puts bday and holiday money into his account and we track it online. I won’t get him a debit card for too many reasons to mention here but he is anxious to spend his money and that’s the main reason. He doesn’t have a “save” mentality yet. We’re working on it.

  8. Penny
    Penny says:

    My son used the Amex/Passcard and it worked very well. He had a set amount each month which was loaded onto the card from his savings account and when that amount of money was spent, that was it for the month. It was a good training tool for him at the time. Since then he has moved to a cash only basis and is managing college and a job, paying his own rent and tuition!

  9. Sue in MN
    Sue in MN says:

    Children should get a credit or debit card when they NEED it as opposed to wanting it. Our daughters were taught to handle their finances with cash & a budget for their wants beginning at age 7, progressed to receiving allowance to cover personal products, gifts to friends, optional school costs in 7th grade. In high school each get a checking account w/debit card with their first jobs. They got a credit card on our account FOR GAS & EMERGENCIES when they got a driving license. If charges appeared that were not OK, they paid & lost card privileges temporarily. If the checking account/debit card was abused, we had a money discussion & set up a plan to correct.

    Today, both are past 30, they live in their own home, and one manages her money brilliantly; the other like she is just learning!

  10. Shari
    Shari says:

    My son got a debit card at 14 as part of his BSA Personal Management merit badge. It’s been good and bad. The good being he learned from his mistakes early, the bad being that he made mistakes. He is now 21 and handles his finances well. My daughter is 18 and does not want any plastic. She likes cash. Everyone is different, parents have to pay close attention.

  11. that_girl
    that_girl says:

    I had my own checking account and ATM/debit card once I got my first car and first job (around 16). But it was entirely up to me to deposit my paychecks and manage that money. My parents paid for the big stuff still, but I was responsible for gas, my own entertainment, anything beyond basic clothes, etc. I got my first credit card (a student Discover Card) at age 20, while living in NYC for a semester, and again, I was solely responsible for paying those bills.

    I think for a teenager with a job, a debit card is fine and less likely to cause trouble, and I think college students should learn to use credit cards responsibly while still in college so they’re not totally overwhelmed when they graduate.

  12. Kate
    Kate says:

    I think everyone, regardless of age, is insulated from handling cash. I recently bought a TV (we had been saving for quite some time) and paid in cash. My 16-year-old daughter was with me and the sight of that money transaction had a profound effect on her. She was much more “nervous” about the purchase; she never would have had a racing heart if I had just handed the guy my debit card. I learned a lot from that event.

  13. lamping06
    lamping06 says:

    I don’t think college is the best time to give kids plastic, either. That was when I first could get a credit card and, being young and free, did not manage it very well. Cash is best. If necessary, debit cards only. My own young children did well managing a VISA gift card they each received once. It was cool for them but at the same time, they appreciate the value of cash. You can’t buy a hunting/fishing license without cash or buy things at rummages or Craig’s list without it! 🙂

  14. hijjo
    hijjo says:

    A minor should, in my humble opinion, be allowed to have his/her own credit card when he/she has her own money from a job or whatever to cover it.


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