It is hard to manage your finances when the income is irregular. There is an uncertainty for people like entrepreneurs, freelancers and self-employed professionals about their inflow of funds. Sometimes, you get a lump-sum amount as the payments and you are not able to plan your income correctly. And it becomes a hurdle in your long term financial goals. Therefore, you need to choose financial plans that offer future stability as well as a systematic way of saving and receiving money on a regular basis.
Here are some tips to turn your irregular income into regular one for a stress-free future:
Make a budget
For a financially secured future, you need to plan your present well. By planning your daily or monthly expenditure and making a budget for irregular income can save a lot of extra outlays. It is very simple; you can start by making a list of your daily expenditure and then segregate the important and inevitable expenses like travel fares and bill payments from the list. In the end, try while spending thriftily on the less important ones such as clothes, outside food and others.
Create emergency fund
Once you have saved enough, make sure that you have enough funds to last at least 6-8 months for any emergency situation. According to experts, due to lack of emergency funds or contingency funds, people end up liquidating their assets for financial aid. Hence, it is recommended that you allocate a small sum of money from your monthly income towards emergency funds.
Invest to earn
Sometimes spending in the right places can benefit you more than savings. Investing in sources like debt funds, equity funds, and liquid funds not only boosts your monthly income but can also help in the daily expenses. Before investing in these schemes, it is important that you have basic knowledge about the stock market and how these investment sources work.
Get an insurance
Financial planning is incomplete without insurance. An insurance offers you financial coverage for a specific period of time. From an investment planning perspective, insurance can be like a contingency plan for people with irregular income. The best part about availing insurance as an investment option is that it offers coverage in case of an accident or emergency.
Repay your debts
Debts, no matter how small, keep consuming your finances. People with irregular income often fall short of funds, hence they choose loans or debts as a quick solution. Debts from banks and finance companies come with interest rates that increase the repayment amount by a certain percentage. This interest rate can be avoided if you pay the debt as soon as possible.
If you have an irregular income, it is recommended that you look for sources that provide you with regular income. You can also invest in sources, which provide favorable returns and keep giving you regular income. Aegon Life offers a range of savings plans that come with the added benefits of insurance, as well as options like money back at regular intervals, boost in savings, and bonus payouts.
PS: I produced this blog for Aegon Life, an Indian life insurance provider founded in 2008 with headquarters in Mumbai.