Although some of the world’s highest earners have irregular income streams, such as the founders of businesses that go on to experience major success, most people who have unsteady income earn an average amount of money. Here are a few tips and tricks for navigating your way through the waters of raising a family on an unsteady income
*This is a collaborative post*
1. Let’s look at the root of most cases of unsteady income
Some people, such as car salesmen, are only paid for how well they perform. In the case of car salesmen, zero customers could visit a lot in a week’s time, leaving them with potentially no earnings. As such, they need at least a little bit of luck to do well.
Others are self-employed, either with a work-from-home gig or another form of freelance enterprise. Although these people have autonomy over their work and the potential to earn as much as they want, many self-employed people experience gaps in their earnings in the initial stages of their autonomic operations.
2. Start cutting yourself paychecks
Before explaining this tip, understand that you’ll have to be responsible enough to save money and pay yourself an equal amount each pay period no matter what wants or needs arise in your personal life.
First, store between four and eight pay periods’ earnings in a checking or savings account opened specifically for that purpose. Average your earnings per pay period to determine how much you earn in a typical week. Pay yourself that amount each week from the bank account that’s set to the side as a way to simulate steady income.
Although all you’re doing is labeling money differently, this strategy works for many households suffering from the downsides of unsteady income.
3. Look into the benefits of an installment loan
Installment loans are those that are paid off in steady increments on a regular basis throughout their term lives. Companies like the Western Shamrock Corporation specialize in offering these loan products to consumers. The opposite of installment loans are revolving lines of credit, which only require you to pay back money based on how much you spend in the most previous month of use.
Although borrowing money to pay for necessities such as food and utilities is never a good idea, you may find yourself forced to when times get tough. Installment loans are great for these situations. Just make sure to map out the repayment plan to ensure the debt is paid off on time.
4. Equally allocate your earnings to necessary bills
Rather than paying off one bill or obligation at a time, you should distribute your weekly earnings equally in proportion to the size of your necessary bills.
This is a much better idea than paying off bills once at a time, as debts could accumulate more interest than if they were paid off incrementally and equally in proportion to other obligations.
5. Accumulate an emergency fund
An emergency fund, as far as personal finance is concerned, is a sum of cash. This can be stored in a liquid bank account or in actual, cold, hard cash. Either way, it’s there for quick and easy access in case of emergency.
Most experts in personal finance recommend that United States households have enough money in their emergency funds to cover at least three to six months’ worth of expenses, including mortgage instalments, food, and unforeseen car repairs.
If you have an emergency fund, your household will be able to stay above water for long enough to find a new major income stream. It’s worth also looking to see if you can make a claim for a mis-sold pension PPI or similar as claiming back any money you’re owed could really help if you become stuck, financially. This is why emergency funds are so important.