Budgeting for Medical Expenses on Irregular Income

Written By: Katie Brenneman
Reviewed by: Mike Reyes
Last Updated December 20, 2022

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So, you’ve been wondering how to handle healthcare coverage. It may have made you a little nervous about approaching that topic. That is entirely understandable, and you’re not alone. 

There are over 70 million freelancers in America who may also have irregular incomes and they all need healthcare, the same as you do. 

Knowing your medical expenses is tough, and there’s no possible way to know everything you’ll pay for in a year, what with emergencies and accidents that happen. But there are certain medical expenses that you can anticipate. With some dedication and forethought, you might be able to prevent significant future expenditures from being thrown into your lap. 

Let’s discuss some of the fundamental first steps to tackling how to go about budgeting for healthcare expenses with a fluctuating income. 

Preventative Healthcare & Wellness Visits

Orienting your lifestyle ahead of time to prevent illness and injury is one of the most significant changes you’ll need to make in your everyday life. Devote yourself to changing in a meaningful way by creating habits that build you up physically and mentally. 

Regulating your exercise, diet, stress intake, and free time will help you curb future health issues that might cost you thousands or tens of thousands of dollars.

Building an exercise routine that is manageable and scalable for you will not only make you feel better about yourself in the short run, but it will keep you from developing many bodily illnesses that would likely cost you to treat.

Controlling what you eat and, more importantly, the portion sizes of what you eat is quintessential to preventing numerous health issues like obesity, diabetes, and high cholesterol.

Get the jump on significant health issues related to your eyesight, hearing, brain, liver, urinary tract, lungs, stomach, nose, throat, pancreas, colon, and heart. Being able to anticipate your risk for any problems related to major organs and sensory stations in your body can help you prevent expenses in the future. 

Primary care physician

Begin by expressing your and your family’s financial situation and goals to your primary care physician. The first point of contact is sharing with them the nature of your income, and how you wish to mitigate future expenses as much as possible.

Your doctor should be able to help you identify current risks imposed on your or your family member’s health. Together you should discover what concerns might develop negatively moving forward.

Ask them about your hearing, your vision, your oral health, and anything that you feel needs attention. It’s also important to identify health risks that are imposed on you and your family based on your climate and environment, either at home, at work, or at school.  

They will likely refer you to get specialized attention beyond what they can help identify. Now, this is where you can start to get in the weeds. It’s tempting to want to be seen by every specialist but really focus on areas of concern with your health or possible future concerns based on family history. 

For example, if the women in your family have a history of uterine cancer and you’re a woman, you’ll want to address that with your doctor before it escalates, leading to significant medical bills. 

It’s also important to realize that with the right preventative care, you may eliminate the need to see your dentist or optometrist as often as you might think. 

Visits to the dentist

For instance, the typical understanding is that you should try to see your dentist every six months. However, with the proper upkeep of your dental health, (brushing, flossing, mouth washing, and tongue scraping) you may be able to get away with only annual dentist visits or even visits every 18 months to save money.


If you wear glasses or contact lenses, you can save yourself the cost of prescription eyeglasses by keeping your written prescription and purchasing off-brand frames from online retailers that will cost you a fraction of frames and lenses from an optometrist’s practice or retail store. 

If you’re a fan of wearing contact lenses, try getting used to wearing an affordable pair of glasses when you’re not going out. As hard as it may be to adjust out of contacts into glasses, it can save you hundreds of dollars a year by using your eyeglasses instead.

Where you live matters

The area where you live can also bear an impact on your health risks and access to healthcare. Rural households typically hold fewer amounts of health coverage due to being less connected to mainstream information and medical infrastructure. 

Alright, we now approach the topic of smoking. If you’re a smoker, odds are this isn’t the first source telling you to quit. 

Smoking will not only reap havoc on your finances in terms of being expensive to purchase, but it will also wreak havoc on your body and then wreak havoc again on your finances from a medical perspective. Quit it and save yourself from thousands of dollars spent on cigarettes and subsequent medical bills created by smoking. 

Alcohol consumption

Along those same lines comes the consumption of alcohol. Alcohol is among the leading causes of cirrhosis of the liver and creates irreversible liver failure. By limiting your alcohol consumption, you’ll save money on not only purchases but also potential future medical bills related to liver problems. 

All in all, there’s a wide-open world of issues that can go wrong with your body. It’s up to you and your primary care doctor to identify what those risks are and what you can do to prevent them so you’re not racking up medical bills down the road. 


Get an Idea of Your Income

Knowing how to budget for an irregular paycheck will equip you with the confidence and peace of mind to tackle any financial decision. You certainly won’t be able to afford everything you might want right away, but you’ll have an easier time knowing what you definitely can afford and what you definitely can’t afford. 

A solid way to measure your financial security is to determine your average monthly income. Do this by assessing all of the worked income from freelancing, commission work, or another source of income that you reap on a monthly basis. Ideally, you’ll want around 4 or 5 months of data to form a pattern that you can begin to rely on. 

It’s also wise to understand any large variances in your income from month to month. For example, in January, let’s say you earned $1,100 in gross income. Then in February, you earned $700 in gross income. And in March, you earned $1,300. From January to February, there was a 36% decrease in income. In March, there was an 18% increase compared to January.

 If you can identify why that was, you may be able to moderate subsequent months so that the variance isn’t as chaotic. If you average the income earned in each of the three months, you’ll come out with roughly $1,033. That is the staple you should plan around for the year. Don’t build a lifestyle beyond your means if one month you make 50% more than the previous month. Always look for a reliable pattern in your income history before making financially driven lifestyle changes.

Establish Baseline Expenses 

Let’s talk about baseline expenses. Understanding the categories of things your household spends money on will help you realize the landscape of your expenses and how it may affect what healthcare solution you can afford.

Fixed costs

Fixed expenses don’t change (or rarely change), like your mortgage or rent payment, cell phone bill, waste management pickup, utility bills, and media subscriptions. Fixed costs are easier to understand and factor consistently since you don’t have to guess what the actual expense will be. It’s also easy to make reliable calculations by adding or subtracting fixed costs from your budget sheet. 

Variable costs

Variable costs typically consist of somewhat-predictable costs that will vary. For example, food and groceries are variable because it’s not a static day each month where you might grocery shop. 

Periodic costs

Periodic costs happen after a certain period, whether it be a specific calendar date each year or once you’ve maxed out a reserve fund somewhere. For example, many states offer car-mounted transponders that automatically pay expressway tolls for the user. Once the pre-loaded funds on the transponder are exhausted, a charge is made to reload the transponder. This is a type of cost that happens when certain criteria are met or a specific amount of time has passed. 

Take the time to categorize each expense you currently have. Knowing which costs you can count on and which ones to pad extra cash for will help you form a realistic expectation for your total annual expenses. 

Discretionary income

Once you have a firm grip on how your money is being allocated, you can operate with whatever is left as your discretionary income, which will also be allocated.

Discretionary income is a term that refers to unused dollars which are usable, as its name implies, at your discretion. It’s free-play money; do with it as you please. Except that it’s not completely discretionary yet, because we’re about to reallocate it into your healthcare budget in a moment.

Any leftover, unallocated income can be used to help you decide which healthcare plan is right for you. We’ll cover that in the next section. 

Consider the options

For now, let’s take a brief pause and consider your options if you have little or no discretionary income. If you have none, you will want to revisit all of your other expenses and see which you can cut. The hard reality is that your and your family’s health is more important than certain expenses that most people take for granted, like trash pickup or a second vehicle and its insurance. 

Comb through your expenses list and identify which items are impossible to get rid of and which ones you can live without. Hack up the entire list until you are left with only the bare essentials. This is called your bare-bones budget, and you need to make sure you can afford everything on the list. 

If you still find yourself struggling to make even your bare-bones budget work with some discretionary income left over, it’s probably time to start looking for higher-paying work. 

Reducing Expenses to Afford Healthcare

Avoid debt like the plague. Having access to loans and financing options is a privilege, but if not properly controlled, the debt leftover from borrowing can paint you into a corner. Your number one goal in managing your debt should be to identify which account is carrying the highest interest and attack that debt. 

Focus as much of your budgeted dollars for debt repayment on the loans that will squeeze the most out of you over time. Killing those debts first will free you.

Refinancing your home or renegotiating your rental agreement could alleviate some of the recurring costs on your household. 

At first blush, it might seem daunting to try to ask your landlord for a break on the rent payments. But if you’ve rented from them for a while and are a responsible tenant, they might be willing to work with you in order to keep you. It never hurts to ask. 

Likewise, if you can go through the motions of refinancing your home, you could stand to win a lot of savings. Be wary, however, as refinancing will bear its own implicit costs and you have to ensure that the savings you come out with in the end will exceed the upfront costs of refinancing. 

Pay down as much as you can with new purchases. Just as important as paying off the most costly loans quickly, you can save yourself from longstanding future debt if you prioritize making down payments on future acquisitions for as much as you can.

Regular vs. Unexpected Medical Expenses

It’s always wise to have a crash plan in place for when unforeseen emergencies happen. 

I mean, it’s one thing to be able to support healthcare benefits for your household, but what happens if an expense falls out of the jurisdiction of your health plan? 

It’s important to know that medical debt is almost always interest-free, so absolutely do not pay a single dime with your credit card. Paying with your credit card will become a world of hurt since you’ll not only have to contend with the medical payment, but now you’ll be accruing interest on the medical payment. Always investigate your options for relief, subsidy, and payment plans because there is usually some course to follow that will benefit you. 

Try to set some savings aside strictly for emergencies. Many people will open their own health savings account (HSA) to help fend off large medical bills if and when they happen. 

It’s also important to know exactly what’s covered in your health plan. If you receive a medical bill and it appears to be more than you were expecting, ask your healthcare provider, in writing, to itemize a list of billable items that you’re obliged to pay for. 

As a rule of thumb, any large medical bills should never be paid by default without clarification as to who’s obligated to pay. Make sure you’re aware of what your plan covers ahead of time, so you’re never surprised when a bill appears in your mailbox. 

Choosing The Right Healthcare Solution

Your household’s healthcare plan doesn’t always have to follow the traditional format. There are numerous types of options to choose from to obtain sufficient health coverage within your financial means

We already mentioned HSAs, which you can contribute to only to dip into when you have a medical expense. 

The benefit of these is that withdrawals from them are tax-free, so contributions from your paychecks aren’t taxed so long as the funds you draw from them are used for qualified medical transactions. 

If your income is below a certain threshold, you may qualify for Medicaid provided by the government, either fully or partially. This can be a huge help in supplementing the difference you would have to pay out of your own pocket for a healthcare policy. 

Depending on your value system, a faith-based contribution platform can also be a possible solution for you. 

Healthcare sharing programs like Medi-Share place the payment burden on each and every user of its platform. Whenever a user incurs a medical bill, the payment is shared between all users. 

The other attractive detail of faith-based contribution groups is that they are often non-profit organizations, meaning that they aren’t motivated to incentivize doctors and physicians to prescribe specific drug brands. 

Sharing the burden of expenses can often translate to very affordable monthly premiums and could be a viable alternative.

Of course, if you choose to purchase a traditional health plan in your state’s healthcare marketplace, you could benefit from substantial discounts for paying the fees on your own. 

Often, insurance companies will discount the fee for a personal or family plan if you’re not accessing the coverage through a business plan.

Go Get Covered

So there we have it. A roadmap, if you will. A guide to help you create some healthcare stability — even if your professional life is anything but stable.

Finding sufficient healthcare may feel unsettling at times with fluctuating income, but it’s certainly doable. You’ll want to interpret your income in a way that’s predictable and repeatable. 

Getting a hold of your finances can be tricky when you’re unsure how much you will make by the end of each year, but it doesn’t preclude you and anyone you provide for from needing healthcare. Take the steps early on to make calculated predictions for what you’ll make and what you’ll need. 

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