It is hard to manage your finances when your income is irregular. Budding entrepreneurs, freelancers and self-employed professionals are a few examples of individuals who witness the hardships of irregular income streams. This uncertainty becomes a hurdle in their long term financial goals. It is further observed that as these individuals receive a lump-sum amount in form of payments, they do not get the time to meticulously plan the flow of their income correctly. Therefore, they need to choose financial plans which offer future stability as well as a systematic way of receiving income on a regular basis.
Here are some ways you can turn your irregular income into regular one for a stress-free future:
Make a budget:
To keep yourself financially secure in the future, you need to start saving from now. By planning your daily or monthly expenditure and making a budget for irregular income, one can save a lot of extra outlays. You can start by making a list of your daily expenditure and then segregate the inevitable expenses like travel fares and bill payments from the list. Try to spend thriftily on purchases such as clothes, bags, footwears, etc.
Save more, spend less formula:
This is an instant solution for people who spend their salaries irrationally. You can also follow the two-plan theory, which includes both saving more within areas you haven’t saved before and cutting down on unnecessary spending. Start with a savings plan, see where you can save money out of your daily expenses to begin with
Emergency or contingency funds:
When you feel like you have saved enough, it’s important to ensure that you have enough funds to last at least 6-8 months to tackle any emergency situation. 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. Even though your income may be irregular, a small amount regularly saved can come handy at a later stage.
Invest in income boosting sources:
Sometimes spending in the right places can benefit you more than creating savings. Investing in sources like debt funds or equity funds not only boosts your monthly income but can also lend a hand in the daily expenses. Before investing in such sources, it is important that you have basic knowledge about the stock market and how these investment tools work. One such investment tool is a ULIP plan. An increasing number of people are investing in ULIPs these days owing to its dual benefits. Amongst the best ULIP schemes, Aegon Life’s iInvest plan with no premium allocation is one you must look into when deciding the best ULIP scheme.
Financial planning is incomplete without an insurance policy to bail you out when needed. An insurance policy 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 investment planning is that it offers coverage in case of accidents or mishaps.
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 quick solution. Debts from banks or local lenders 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.
With good financial planning, you can save and invest money for a better future even if you have an irregular income. 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 favourable returns and keep giving you a regular source of 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.
Advt. no.: IA/Jul 2018/4166