Long gone are the days when a single paycheck was enough to cover all the bills and then some. The goalposts have shifted, and steady employment no longer means financial stability. The world has changed, but people’s income hasn’t risen to match it, meaning more workers than ever are struggling to retain financial stability even with well-paying employment.
If you’re trying to figure out how to remain financially stable through this year and into next year, we have some ideas that might help.
Build Multiple Income Streams
Relying on a single paycheck, as many people know, leaves little room for any changes to the normal outgoings and day-to-day expenses of life. And if that income happens to go, then you’re going to find yourself in trouble sooner rather than later.
This is something that has been noted by Alex Kleyner. He states that a variable income from gig-based work, commission-based roles, and seasonal employment is a growing reality for many people, yet it’s something that traditional financial planning fails to take into account.
If you want to build multiple income streams, start by looking at the skills you have and how you can use them to generate more money. You might want to take on freelance work, start a small online business, or even rent out space you don’t use, like a spare room, to get rental income. This will massively help protect you from a single point of failure.
Keep a Flexible Emergency Fund
A fixed three-month target made more sense when income and expenses moved in a predictable, steady way. However, in modern life this isn’t always the case. This means your emergency fund needs to be flexible to help you cover the higher end of your living expenses or multiple income streams. Assess how much you save every few months and match it to your current income so you can adapt how much you save to what you really need, not a target figure.
Track Variable Expenses Monthly
There are always going to be regular monthly bills you can rely on to stay the same and come out at the same time each month. But how are you managing the variable expenses? The ones that vary from month to month or don’t need paying on a frequent basis.
It might be an ever-changing grocery bill, or you might find your utility bills aren’t predictable, or your insurance renewal is more than you anticipated.
To help combat this, sit down once a month, address all your outgoings and compare them to previous months to get a better idea of an approximate amount to budget for. This ensures you remain accountable and can cover all upcoming bills.
Develop Transferable Skills
A single specialized skill in one role or tied to one industry is good, but right now this carries risk. Especially as entire sectors shift faster than they once did. You need to develop skills that can transfer across industries, such as communication, project management, data analysis, or a specific software proficiency that’s used in multiple fields. This means that if you ever find yourself needing new employment, you can use the skills you have to support a new role or even a career change. If you can, develop these skills within your current employment, but if you can’t, then take courses to help you upskill yourself and put your career in a better position.