How to build a financial plan when your income is unpredictable

I’ve been a freelance writer for the better part of 10 years, and admittedly am still figuring out my own financial strategy. 

This past tax season, that reality hit me harder than ever. I was on the phone with my tax preparer, who asked not to be identified because his employer doesn’t allow public media commentary. After reviewing my finances and explaining how he’d arrived at the figure, he finally revealed the number I’d been waiting for: the amount I owed in federal and provincial taxes.

My stomach dropped. I knew I’d owe money—that’s just part of being self-employed—but the number didn’t match how financially insecure I felt. I’d always tried to do the “right” thing, setting aside roughly 30% of my income for taxes. But like many freelancers, I’d occasionally dipped into that money during slower months or to cover unexpected expenses, assuming I’d earned enough later in the year to make up the difference. Apparently, I hadn’t.

My tax preparer suggested opening an FHSA to reduce my taxable income. It was solid advice on paper: contributions would lower my tax bill while helping me save toward a future home purchase.

The problem was that I wasn’t sure it fit my reality. I’m single and rent a one-bedroom apartment in Montreal for less than $1,000 a month, so homeownership isn’t a pressing goal. More importantly, my marginal tax rate was already approaching 30%, and the idea of locking away another significant portion of my income while also paying a large tax bill felt impossible.

Was I simply being undisciplined, or was traditional financial advice built around assumptions that didn’t reflect the realities of variable income?

To find out, I spoke with financial planners, a money psychologist, and freelancers to better understand what financial planning looks like when your income isn’t predictable.

Why irregular income changes the rules

One of the biggest challenges of being self-employed is managing uncertainty. When I worked in-house, it was much simpler to understand how much I had coming in each month, what my expenses were, and what was left over. 

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When you’re self-employed, those numbers aren’t as clear, and they’re also not necessarily guaranteed. Projects get put on hold. Budgets get frozen. But your bills still need to get paid, so you’re left scrambling to make up that income.

Conventional financial advice often assumes that income is predictable. Keep three to six months of expenses in an emergency fund. Avoid interest-bearing debt. Max out your RRSP, TFSA, and FHSA. But for freelancers, liquidity matters, too. The question isn’t whether your income will fluctuate, but how you’ll manage it when it does. How can freelancers build financial systems that account for that uncertainty without agonizing over every dollar?

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To answer that question, I spoke with financial planner Chris Enns, who specializes in helping artists and others navigate the realities of variable income.

Enns starts by asking every client the same question: “What is your money for?” 

The answer helps him design a financial plan tailored to their goals, drawing from a range of tools and systems while recognizing that no single approach works for everyone.

That philosophy is shaped by his own experience. As a self-described “opera-singing financial-planning farmboy,” Enns spent the first 10 years of his career training in opera performance. During that time, he says, he ignored money as much as possible—a decision he now recognizes was a mistake. Today, he’s made it his mission to help artists and other people with variable income become more financially literate.

One thing Enns sees often is clients following conventional financial advice without stopping to ask whether it actually serves their goals. One of the most common examples? “I need to max out my RRSP.”

His response: “Well, do you? That’s not a goal. That’s just something that can serve a goal.”

The hidden cost of self-employment

Running theoretical numbers is all well and good, but the day-to-day realities of inconsistent income and the uncertainty of self-employment go beyond the spreadsheet. I wanted to speak with someone else who knew what it was like to live it. I reached out to Grace McClure, agency owner and fractional CMO. 

I started by asking how often she thinks about cash flow. “Probably every day,” she replied without hesitation.

McClure has experienced both sides of the equation, having recently transitioned from full-time employment with some fractional work on the side to self-employment. Speaking to her, she lauds the freedom and flexibility of self-employment but she doesn’t sugarcoat the challenges. She admits that building a business hasn’t been the straightforward climb she had anticipated. She wasn’t seeing the same inbound requests from clients that she used to. Her calendar was wide open and she was waiting for the clients to roll in, but that’s not exactly how it happened. “It was a lot harder for me to even come close to supplementing the fixed income that I lost.”

Instead of immediately building a thriving business, she says she spent time not doing very much. She quickly realized that “things don’t come to you unless you’re really out there hustling for them, especially in this market.”

One of the biggest adjustments wasn’t just replacing her salary, but taking on every responsibility that comes with running a business. As an employee, McClure says, much of that burden is invisible. Your employer is “taking care of this huge portion of your life,” from finding the work to ensuring a paycheque arrives every two weeks.

Self-employment shifts that responsibility entirely onto you.

“There’s no one there that’s shouldering the responsibility with you,” she says. “I’m responsible for all of these pieces of the pie.”

That means prospecting for clients, pitching projects, negotiating contracts, sending invoices, following up on late payments, and managing the business itself, all before doing the client work that actually generates revenue. 

It also means paying for your own downtime. A vacation, a sick day, or even an afternoon spent on business development can mean hours that aren’t billable, even though they’re essential to keeping the business running.

Even when client work slows, the business doesn’t stop. The administrative work of staying self-employed becomes a job in its own right.

Over time, though, McClure says the tradeoffs began to shift. Once she’d built a stable client base, she found herself working fewer hours for clients while having more time to devote to her own business and her own life. Today, she says it “feels like it’s like a hack that I’ve figured out.”

But that flexibility comes at a cost. Unlike salaried employees, freelancers don’t receive paid vacation, sick days, or statutory holidays. Time spent prospecting for clients, sending invoices, or taking a week off is time that often isn’t billable, making those hours another business expense to account for.

How uncertainty affects our decisions

From my own experience, I know that the toll of irregular income isn’t limited to my bank account; it has a very real impact on my mental health and my ability to make decisions. There’s the constant mental tallying, risk assessment, tax anxiety, and the feeling of always having money coming, but not necessarily available. 

I wanted to know whether what I was experiencing was a personal failing or a common consequence of living with unpredictable income. To better understand the psychological impact of unpredictable income, I spoke with Megan McCoy, Program Chair for the Personal Financial Planning program at Kansas State University.

McCoy says that variable income is uniquely challenging in a lot of ways. The pressures of living with variable income can lead us to make decisions that aren’t in our best interest. We take shortcuts when we have too much information, too little information, or need to act quickly. 

“Our brains do not like ambiguity,” she says. “When we’re worried about money being tight, we may end up making more short-term, impulsive decisions.”

Variable income also means experiencing both ends of the spectrum. “With variable income, you have both the scarcity impact on spending and the windfall impact on spending.”

McCoy’s insights answered one question: why managing variable income felt so difficult. My next question was what I could do differently. For practical strategies, I turned to Certified Financial Planner Thuy Lam. 

Lam sees two common responses to the uncertainty of variable income: people who hoard cash and people who spend as though the good months will continue. Neither is ideal.

Instead of automating every financial decision, Lam encourages clients to build systems they can realistically stick with. “Don’t automate everything blindly,” she says. “Build a system that feels psychologically sustainable.”

She also encourages clients to examine the stories they tell themselves about money. “What money story are you telling yourself that’s keeping you stuck? Is this a fact? Or is there a possibility to create a new money story?”

Systems that actually work (and why)

If uncertainty is part of the job, then a good financial system should make living with it easier, not harder. One thing that became clear in speaking to the experts is that success depends less on finding the perfect strategy than on building habits and systems that reduce mental load and adapt to changing income.

To this end, Enns suggests thinking about money as a technique, not as a math problem. It’s not something you either understand or you don’t, he says, but a skill that can be refined over time. That’s why he recommends setting aside a small amount for taxes even if you’re not making a lot of money and don’t expect to owe anything. Building the habit, he argues, is ultimately more important than getting the numbers exactly right.

The same principle applies to day-to-day money management. Rather than tracking every dollar, Enns recommends keeping a rough tally of your income throughout the year so you aren’t blindsided when tax season arrives. And while automation can be more complicated for freelancers than for salaried employees, it isn’t impossible. Instead of automatically transferring a fixed dollar amount into savings each month, Enns recommends creating a “money rule.” Many banks allow customers to automatically save a percentage of each deposit, creating a system that scales with income rather than locking you into unrealistic targets during slower months.

Several experts also emphasized that where your money lives can be just as important as how much you save. My tax preparer offered an analogy that stuck with me: “Money is like water. It needs to flow, it can’t stay stagnant.” 

Enns echoes this idea, noting that if all of your freelance income lands in one personal chequing account, it quickly becomes difficult to know where you stand financially. Separating money into dedicated accounts—for taxes, operating expenses, or savings—and even giving those accounts memorable names can make the entire system feel easier to manage. “Nicknaming accounts is a great way to just feel like your bank is a little bit less of just your bank,” he says.

Building a financial system also means preparing for the inevitable ups and downs of self-employment. Rather than treating an emergency fund as a fixed three- or six-month target, Enns recommends thinking of it as a cushion that “soaks up the ups and downs” of irregular income, allowing freelancers to pay themselves a more consistent monthly amount. Depending on the nature of someone’s work, that cushion might be one or two months of expenses, or six to nine months for people whose income arrives in larger, less frequent bursts.

That same flexibility applies to borrowing. Conventional wisdom often treats debt as something to avoid at all costs, but my tax preparer argues that context matters. During a temporary cash-flow crunch, he compares withdrawing money from tax-sheltered accounts to “burning your house down to stay warm.” 

In some situations, a line of credit can serve as a temporary shock absorber, helping freelancers preserve their long-term savings instead of dismantling them to solve a short-term liquidity problem. The point, he says, isn’t that debt is always the answer, but that financial decisions should be evaluated in the context of your own circumstances rather than treated as universal rules.

Ultimately, every expert I spoke with returned to the same idea: planning ahead creates options. Whether that means setting aside money for taxes, tracking your income, separating money into dedicated accounts, or building financial buffers, the goal isn’t to eliminate uncertainty. It’s to make it manageable.

As Enns puts it, “Whenever you turn something that feels really scary into something that feels more manageable, it’s such an empowering thing.”

Rethinking financial advice for variable income

Looking back, my tax preparer wasn’t wrong to recommend opening an FHSA. Contributing to one would have lowered my tax bill while helping me save toward a future home purchase. But after speaking with financial planners and a money psychologist, I realized I’d been asking the wrong question.

“What is your money for?”

It’s the question Chris Enns asks every client. By the end of my reporting, I understood why. Before deciding whether I needed an FHSA, an RRSP, or even a line of credit, I first needed to understand what I wanted my money to achieve. RRSPs, TFSAs, FHSAs, emergency funds, and lines of credit aren’t goals in themselves; they’re simply tools that may or may not help you build the life you want.

Conventional financial advice isn’t wrong, but for people with variable income, it’s often incomplete. The right financial tools only make sense once they’re in service of the life you’re trying to build.

About Anya Leibovitch