Overview
Ravi, a 30-year-old freelance photographer from India, earns differently every month. In April, he made ₹50,000 from wedding shoots. But in June, he earned only ₹10,000 due to fewer projects. One month, he struggled to pay rent. Let’s learn how Ravi managed his fluctuating income smartly.
Not everyone receives the same salary on a monthly basis. There are other forms of employment, like freelancing and seasonal jobs, wherein regular payment comes with irregular income. So for such types of income, money management needs more planning.
Reduce your EMI burden! Merge your debts into one low-cost loan today.
Understanding Income and Expenses
- Calculate Average Income
To start, Ravi added his income for the last year: ₹5,40,000. He divided this by 12 months to find his monthly average: ₹45,000. This figure proved useful for Ravi in determining how much of his income could be spent in a month. - Identify Expenses
Ravi listed his expenses:
- Fixed expenses: Fixed expenses like rent: ₹10,000, electricity: ₹2,000 and Wi-Fi: ₹1,000 did not vary on a month to month basis.
- Variable expenses: Expenses like groceries: ₹8,000, travel: ₹4,000 and entertainment: ₹3,000 changed based on his needs.
This helped Ravi understand where he would be able to cut back on spending during the months with low income.
- Budgeting Wisely
Ravi made sure to raise all his fixed expenses that amounted to ₹13,000, first. For instance, in June when he earned a gross income of ₹30,000, he minimised his entertainment expenses which had been fixed by using the camera without its accessories.
Building Financial Resilience
- Emergency Fund
Ravi saved ₹1,000 weekly. After 6 months, he had ₹24,000 (₹1,000 × 24 weeks). This fund helped him pay rent when he earned only ₹10,000 in a slow month like February. - Holding Account
Ravi deposited all his income into one account. Each month, he withdrew ₹25,000 for expenses. In November, when he earned ₹1,20,000 during the wedding season, he saved the extra ₹95,000 for lean months. - Cash Flow Forecasting
Ravi made a simple income and expense calendar. He noted that most weddings happened in October and November. Knowing this, he planned bigger purchases, like buying a new camera for ₹50,000, during these months.
Smart Spending and Saving
- Limit Credit Card Use
Ravi avoided using credit cards to pay for groceries and rent, as they charge high interest. Instead, he used his emergency fund. This saved him over ₹2,000 in potential interest charges. - Tax Planning
Ravi saved 10% of every payment for taxes. For instance, when he earned ₹50,000, he kept ₹5,000 aside. At tax time, he had enough money to pay without stress. - Diversify Income Sources
Ravi started teaching photography online, which added ₹15,000 per month to his earnings. With this, his income during a slow month rose from ₹30,000 to ₹45,000.
Read More :- Union Bank Net Banking
Conclusion
Dealing with fluctuating revenue is challenging. It can be made easier with the proper designs. Ravi’s story shows how tracking income, saving for emergencies, and cutting unnecessary expenses can bring stability. It does not matter if you have a job that is freelance or a temporary job during some seasons, these tips will enable you to better manage your funds and mitigate worries about the future.
FAQs
Q1: What is irregular income?
Irregular income means earning different amounts each month instead of a fixed salary.
Q2: Why is an emergency fund important?
An emergency fund helps cover expenses during low-income months.
Q3: How can I calculate my average income?
Add your total earnings from the last year and divide by 12 to find your average monthly income.
Q4: What is a holding account?
A holding account is where you deposit all your income. You withdraw a fixed amount monthly for expenses, helping manage fluctuating earnings.
Q5: How much should I save for taxes?
Set aside 10–20% of your earnings for taxes, depending on your income and tax bracket.
