In today’s World, there’s no job guarantee. You could be out of job, anytime. It’s not just you, it could happen to anyone. You must have a plan to manage money, when there’s no regular income. Take a look at this. Amazon India sacked 60 employees last week. Downsizing in top IT Companies, meant a lot of employees lost jobs. So, not having regular income is a way of life.
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1. Make a budget based on lowest monthly income
It’s very tricky making a budget based on average income. Let’s say your income in the past 4 months is Rs 20,000, Rs 16,000, Rs 18,000 and Rs 24,000. This means an average monthly income of Rs 19,500. Unfortunately, this is not an income you have earned. It would be better to base your budget, just on your minimum monthly income which is Rs 16,000 in the above example. This gives you a buffer when there’s irregular income.
Always make a budget based on lowest monthly income, if salary is irregular.
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You have made a budget based on lowest monthly income. Now, get an idea on monthly fixed expenses. No matter how high or low your income, these expenses remain fixed. Find this difficult? We’ll explain it to you. You have to eat, pay the rent, commute, pay utility bills like electricity and water bills, no matter how low or high your monthly salary.
Add up all the monthly fixed expenses, and get an idea on how much is needed to sustain yourself, each month.
It’s tempting to overspend when you get paid. It’s important to remember the bad times, just like the good times. Just because there’s money in the bank, don’t spend all of it. Keep some money for the bad days. You could spend on parties and movies at a later time, when income is more regular.
Always have two savings bank accounts. You can keep spending money in one of the accounts, and money for basic expenses in another account. This will help in efficient monitoring of money.
4. Avail life and health insurance plans
If your income is irregular, make sure to avail a term life insurance plan. You have to pay a premium and you get cover (protection) for a fixed time period, called tenure of the term insurance plan. If a policyholder dies within the term of the plan, nominees get the sum assured also called the death benefits. Nominees can pay back car loans and home loans with the death benefit. If you survive the term of the plan, you get nothing.
Make sure to have an individual or family floater health insurance plan, which covers your family for hospitalization expenses. With irregular income, unexpected hospitalization is a nightmare.
5. Avoid loans completely
If your income is irregular, make sure you never avail loans. Don’t avail home loans or car loans, until income is regular. Avoid credit cards and personal loans totally, as they charge high interest and you will struggle with repayments. Any loan repayments will be a burden, as they increase minimum spending. If your income is irregular and you avail loans, you could land in the debt trap.
If you have already availed loans, make sure to pay them off. Include these loans as part of monthly fixed expenses, and pay them as a priority. Be Wise, Get Rich.
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