Manage Irregular Income

Life was simpler in earlier times. The norm was that you studied, got a job, got regular pay hikes and retired. Meanwhile you saved and invested money.

It is not that simple today. Many people do not have a steady source of income. This is due to -

·       Economic conditions are uncertain leading to loss of job or lack of business income.

·       People work on projects and assignments rather than regular jobs.

·       Many go the entrepreneur way.

·       People work on a freelancing mode.

·       Some depend on stock markets for income where there is no guarantee.

This leads to uncertainty in cash flow. How can one manage personal finances in such a scenario?

Create a Budget – Know your monthly expenses. Bifurcate the essential and non-essential expenses. Manage your income such that essentials items like food, rent, utilities can be paid for. Calculate an average monthly income based on your past income flow. This helps to determine how much you can spend.

Do not go overboard when you earn more than expected – Do not to spend more when you earn more. The extra income earned this time can compensate for low income earned at other times. Use the money to pay off credit card bills, upgrade your skills and investments.

Avoid personal loans or take loans for consumption purposes – Since you are not sure of what your income will be, avoid taking personal loans. The interest rates are high. Do not take loans for vacations or items like a home theatre system. You will waste your money in servicing these loans. Wait for some time to go on that dream vacation and check out second hand appliances and electronics or buy when there are sale offers or zero interest instalment schemes.

Watch your credit card bills – It is easy to swipe the card and splurge on treats for yourself. Do not use the credit card irresponsibly. Pay off bills within the due date else you can fall in the credit card trap paying high interest costs.

Invest, Invest, Invest – There are many investment options ranging from safe to risky. Try to save regularly and invest the savings. This will help you beat inflation, earn money and create wealth.

When you do not have a regular source of income, investments tend to take a backseat. This can lead to a difficult situation as you have no regular source of income and you are not building your wealth. Here are some investment options to consider when you your income is irregular-

It is possible to have a stress free financial life with irregular income as well. You need to be disciplined, save and invest.