This post is adapted from a recent episode of the Scholar Financial Advising podcast. Listen here for the full discussion.
A listener asked:
“I’m a physician in private practice, and my income varies because I’m paid based on revenue share. I want to save more aggressively for big expenses like a home renovation and my kids’ college fund, but I’m nervous about committing to contributions I may not be able to sustain. How should I approach this?”
This is a common challenge for physicians—and others in fields like law, banking, and consulting—where income depends on production, hours, or collections. With variable earnings, the traditional approach to saving on a set schedule doesn’t always work.
The Problem With Uneven Income
When you first start out, you may be able to live entirely off your base salary. But over time, your bonus or revenue-share income grows, and eventually, you have to rely on that fluctuating income for your core spending.
That’s where the stress begins—especially when you want to fund long-term goals like college or home renovations. These are not just expenses. They’re commitments. Once you put the money toward a renovation, you can’t get it back. And that can feel risky when your income varies month to month.
Step One: Build a Bigger Buffer
Before anything else, revisit your emergency fund. For someone with stable income, three months of expenses might be enough. But if your income swings widely, aim for six months or more. This buffer is your first line of defense when you hit a slow stretch or face unexpected costs.
Step Two: Create a Cash Flow Stabilizer
The next move is to separate your income streams. Think of it like forcing a steady paycheck out of a variable income source.
Here’s how it works:
- Decide how much money you want to consistently land in your checking account each month. This is your “base salary.”
- Set up your direct deposit (or transfer manually) so that anything above that base amount flows into a separate short-term brokerage account or high-yield cash account.
- Use that account as a buffer to cover any shortfalls in low-income months.
Over time, this will give you a much more stable sense of what you can afford on a regular basis, even when your actual income bounces around.
Step Three: Shift From Monthly to Annual Thinking
Many people are taught to contribute monthly to things like:
- 529 plans
- Roth IRAs
- Brokerage accounts
That approach works great for salaried employees. But if your income varies widely, it can backfire. Some months you won’t have enough left over to contribute anything. Other months, you’ll have more than enough—but without a plan, it might disappear.
Instead, use lump sum contributions when bonuses hit. For example:
- Use your January or Q4 bonus to fund the entire year’s 529 contributions
- Complete your backdoor Roth for the year in one move
- Allocate leftover funds to your brokerage account or home project fund
You’re still contributing—just on a timeline that matches how your income flows. This removes the monthly pressure and helps you prioritize based on total cash available.
Final Thoughts
The problem isn’t that you’re not making enough. It’s that your income doesn’t arrive on a predictable schedule. When that’s the case, the key is to think in annual goals rather than monthly habits.
Build a strong cash buffer, route bonuses strategically, and shift your mindset from “Can I afford this right now?” to “What do I need to fund this year—and when will the income be there?”
That’s how you stay in control of your savings even when your income is anything but consistent.
For more strategies on managing fluctuating income, listen to the full podcast episode here.