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Last Updated : Mar 27, 2018 06:14 PM IST | Source: Moneycontrol.com

How to manage expenses when the income is erratic?

Some handy and useful suggestions to help you trade-off income and expenses when the income starts fluctuating


Rachit Chawla

According to the famous American author, businessman, and financial broadcaster, Dave Ramsey, “You must gain control over your money or the lack of it will forever control you.”  This is a lesson that everyone should learn and oblige to keep the life smooth even in the toughest times. Truly, lack of money brings a lot of problems. Although everyone is familiar with this blunt truth, those who behold it firmly are very limited.

In fact, nothing is more certain in life than uncertainties, but if one is quick to find solutions, then happiness is not just possible, but certain. The inflow of money never remains constant, when it is heavy, everything goes great, but when it slows down, problems start culminating rapidly. Hence, to ward off a financial crisis, learn the art of managing it in your heydays, not in the time of troubles. Below are some useful suggestions that help to trade-off income and expenses when the income starts fluctuating.

1. Make a safe payment plan

There is no magic equation involved to get rid of those impending debts, but it’s the strategic planning and strict discipline from the debtor’s side that makes the whole process go smoothly without any bumps and financial aches. It’s healthy for a borrower to keep records of all the loans one owes in order of their repayment dates, payment modes, and interest rates not just to gain a better insight of their financial stability; but also to ensure timely payments free from the pressure of any penalty or fine.

The next big step in payment planning is to decide on the amount one can bear to pay off for a particular credit every month. It’s always beneficial to keep the monthly payment instalment a bit less than the affordability scale because one never knows when they can land in a financial emergency. In the stages of financial crunch, every bit of savings sounds relief but if this is not the case, the debt trouble is likely to double up with more of borrowing and repayment plans landing up in the financial cycle. As there are numerous benefits of the pre-payments of the highly intriguing credits, one can strategically utilise their savings for the emergencies and advance payments, and hence lead to a tension-relieving financial path.

2. Abide by the automatic deduction process

Setting up a constrained spending plan and keeping aside money for credit payments usually isn’t possible and ends up landing in pointless expenditures. Nonetheless, if the same gets automatically deducted from the salary account, a huge difference is witnessed in the expenditure behaviour of the people, which is much essential for their financial growth. This will help the borrower’s stay away from unnecessary transactions that can later on shadow their every month’s obligations towards the debt. It’s advised to keep a regular check on the automated transactions, as at times there are chances of fraudulent activities taking place without the account holder’s knowledge, and the same doesn’t even get refunded if it’s too late. So, make certain to check oftentimes and confront issues as and when they occur.

3. Limit your expenses

This idea sounds easy and immensely amazing in the initial stages, but implementing the same in the actual scenario is quite a task. However, in the times when one can’t escape the debt obligations, cutting down on expenses is a great way of saving some bucks for the episodes of risk and uncertainties. Begin by assessing the monthly budgets and cutting down the costs wherever there stands a chance. This might start with refraining from outings at every weekend, cutting down the once-in-a week eating out tradition to once in a month ritual or skipping those unnecessary satellite TV bills when the same can be accessed on the smartphones, etc. Cutting down the costs in the debt-repaying period will immensely help the debtors to save some bucks and get rid of the restrictive obligations at the earliest.

4. Re-evaluate your expenses

With this, the borrowers are meant to indulge only in obligations that they hold the potential to ward off easily, even in events of emergencies. This sounds great, but when it comes to the implementation only a few are able to go through it and get the best of its benefits. For example, home loans and school credits are some of the obligations that are truly authentic and even necessary, but while making such decisions one should be content enough to not lay hands on the projects that are costly and consumes the most of the budget.

5. Say yes to savings

Saving is a habit, good not just for meeting the sudden emergencies that land in the recent scenarios but also for the ones that lay enveloped in the future financial scenes. There are certain market risks, like inflation and recession that land unannounced making the businesses and even the individuals’ experience huge losses that at times also lead to the bankruptcy of many. These uncertain events can occur at any point of a person’s life, they often might land in the 30s or 40s of the person, when he/she is already burdened up with family responsibilities and is not in a position to cut down the expenses, a bit more. To tackle such situations, the market analysts and the financial experts advise the youths to spend rationally and save money in the greener phase of their lives to tackle the scarcity of resources in later on life-stages with utmost ease.

6. Be smart and make your life simpler

To get a peaceful and smoothly forward moving life, the idea is not in making heavy money but in strategically balancing the saving and expenditure scale in whatever is being made. Taking into consideration the numerous uncertainties, it’s always apt to keep the savings side of the scale loaded up more with funds. Obviously, one needs to consider previous debts and necessary expenses, but still saving for the pre-payment of obligations will benefit one with some really amazing benefits. If things don’t turn out beneficial despite several efforts, then turning out to assistance from a credit directing office will be a saviour move of the event. From assisting a person with the current budget issues to encouraging the most proficient method to deal with earnings, these expert professionals help the people develop healthy arrangements for dealing with their money.

(Rachit Chawla is founder and CEO of Finway Capital, a non-banking financial company. Views are his personal)
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First Published on Mar 27, 2018 05:38 pm
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