Living with a Fluctuating Income

Living with a Fluctuating Income

When I opened my business in December 2008, I was working full time, so being a Family Financial Advisory was my secondary business.   In 2012 my job was reduced to part time, so I had a stable but smaller income, and it gave me more time to develop my business.  The situation changed yet again in 2013 when Suzy Kahati – Family Financial Advisor – became my primary source of income and a full time business.

There is such an enormous difference between a secondary and a primary business. When there is no other source of income to rely on, ensuring that there is a steady stream of clients becomes crucial to the survival of your primary business.  I tried different marketing strategies – some failed miserably and some were a tremendous success.  It took me at least two years to find systems that suited me, my business and ultimately my clients.

Running my own business has had its challenges, but the most challenging is dealing with a fluctuating income.  My business needs to be funded, but my household also needs financing.

Who Has a Fluctuating Income?

There are many situations where people need to deal with a fluctuating income. For example, if you are receiving an income from abroad you may be exposed to fluctuating rates of exchange. More drastic is the life of a salesperson whose salary is based on commission. If they go on holiday with their family for two weeks in the summer, then they will not only forgo their full salary but they will also have a month of even higher expenses. In such cases, budgeting is imperative to maintaining financial stability.

Then we have seasonal workers; summer workers like tour operators, tour guides, wedding planners, and people who work in agriculture. Seasonal workers are employed very intensively for six months of the year, and during the other six months they lie in bed and say: ”What are we going to do today?” For people in this situation, budgeting is vital to ensure that your money lasts the whole year round.

Then we have people who run small businesses, like myself, who find it very difficult to forecast how much they will earn next month, or the following month, or six months down the line.

Managing a Fluctuating Income

For all of these people, it is important to learn how to prioritise your expenses – one of the most powerful tools in budgeting – in order to achieve and maintain financial stability. It is therefore crucial to be familiar with the four types of expenses which are:

  1. Vital Expenses Type 1: These are items with a fixed monthly cost, making them easy to predict. These expenses have to be paid on time and one cannot negotiate the amount.
  2. Vital Expenses Type 2: These are variable monthly expenses so they require careful thought when budgeting. These expenses have to be paid on time, but the amount may be negotiated and therefore controlled.
  3. Essential Expenses: These are items that have a set variable monthly amount which can be decreased or postponed.
  4. Non-Essential Expenses: These items are not vital or essential and therefore they can be decreased, postponed or cancelled.

Learning how to juggle these expenses will assure that you achieve and maintain financial stability. If you wish to receive more information regarding prioritising your expenses and managing your family finances on a fluctuating income, please contact Suzy Kahati, or 054-4217207.