How to plan your finances if you have an irregular income?

Listen up professionals and start-up owners!

Every individual has a passion and a dream. Many wish to break free from their mundane work life to pursue their passions. However, it can be difficult to break the shackles of comfort and security that a well paying job offers and venture into unchartered territory that your dream might lead you to. For those who manage to do so, we tip our hats to you and offer these words of advice.

 

Being a business ourselves, we understand the trials and tribulations that a professional or a start-up founder goes through. The fact is that it can take a while before you break even and start drawing an income. Even the revenues generated can be irregular so how do you manage your personal finances and ensure neither your nor your family’s dreams are compromised.

 

1. Know your expenses– With a job that gives you a fat paycheck your lifestyle expenses are bound to be high. Now with an irregular salary keeping up with the same expenses will get challenging. You and your family should be prepared to adapt to your new financial situation and trim down your expenses wherever possible. It might make sense to set up a SWP (Systematic Withdrawal Plan) that provides the necessary income and help you stick to a budget without going bust.
2. Keep those SIPS going through the good and the bad days-As the case is with most businesses, the revenues are not steady. There will be times when the business would have done well and the receivables have also come in and then there would be not such great times. With such irregular and unsteady income how do you manage to keep your family’s dreams alive. The Key is to invest the surplus in a liquid fund which will then systematically transfer the money on a regular basis in an equity fund. This will ensure that you keep saving and investing towards your future goals unhindered by the ups and downs of your business.
3. Insurance, your protection shield– The job of a life insurance policy is to not only provide for your family in case of an unforeseen event, it is supposed to also cover your outstanding loans and the financial goals such as kid’s higher education, comfortable life for your dependents etc. So ensure you have taken a cover large enough to meet your family’s needs. A simple term plan will do the needful.
4. Health is wealth– With the medical inflation rising at 10-15% annually, the importance of a medical insurance can not be stressed enough. Health is indeed wealth but you don’t want to lose your wealth due to any illness or accidents. You might also want to consider taking an accidental and critical illness policy as a safe guard measure along with a regular medical cover.
5. Contingency fund- This fund should be large enough to cover your 6-8 months expenses. Since you do not have a regular income, it is optimum to consider expenses over a longer period. You could even consider including your SIPs amounts for those many months, this will ensure your goals are right on track and are not hampered by the volatility in your income.
6. Keep personal and business expenses separate– This is the most important advice as it is very easy for the business expenses to spill over and be paid for from your family kitty. This is especially possible if you use the same credit card for both personal and business use. This can further stress your family budget over time.

With an irregular income it becomes essential to plan and channelize your money to ensure your family is well secured financially and their goals and dreams have wings. You might want to consult a financial planner to see how to fund your family goals if you choose to launch your start-up.

 

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What is a Living Will

 

 

In a landmark judgement, the Supreme Court on Friday recognized that a terminally-ill patient or a person in persistent vegetative state can execute an “advance medical directive” or a “living will” to refuse medical treatment, saying the right to live with dignity also includes “smoothening” the process of dying.

What is a Living Will?

It is essentially a document that sets out a patient’s wishes regarding how they want to be treated if they are seriously ill or in a permanently vegetative state. With this judgment, the right to die with dignity has been recognized as a fundamental right.

As regards personal finances, perhaps a big critical function that a living will performs is that it allows the maker of the will to prevent their family from financially overburdening themselves, sometimes to the extent of bankruptcy. Usually family members are spurred on out of love, guilt or a sense of duty to keep the patient alive, often at any cost. This results in the family’s financials going into disarray and jeopardizing their financial future and important life goals.

Who qualifies to write down a Living Will?

• An adult who is of a sound and healthy mind and in a position to communicate, relate and comprehend the purpose and consequences of executing the document.
• An adult must make such a will voluntarily 

What are the important items to cover in the document?

The judiciary has laid down guidelines on how such a document can be formed. They are as follows:

• It should clearly indicate the decision relating to the circumstances in which medical treatment can be withdrawn.
• Instructions must be absolutely clear and unambiguous.
• It should mention whether the patient would like torevoke the instructions/authority at any time.
• It should specifythat the patient has understood the consequences of executing such a document.
• It should specify the name of a guardian or close relative who, in the event of the patient becoming incapable of taking decision at the relevant time, will be authorized to give consent to refuse or withdraw medical treatment
• It should be in writing and should clearly state as to when medical treatment may be withdrawn or if specific medical treatment that will have the effect of delaying the process of death should be given.
• If there is more than one valid Advance Directive, the most recently signed Advance Directive will be considered as the last expression of the patient‘s wishes and will be implemented.

How should this document be stored? 

The Supreme court has further laid down a road map on how the Living Will needs to be stored safely:

• The living will should be signed by the maker in the presence of two witnesses. It should be countersigned by the judicial magistrate of first class (JMFC), confirming that the will has been drawn up voluntarily.
• The JMFC will maintain a copy of the will and forward a copy to the registry of the district court of that jurisdiction.

Implementation of a Living Will 

The Supreme Court has described various checks on how a living will may be implemented:

• Execution of the will can only be done if the medical board approves it. The medical board will consist of the head of the treating department and at least three experts from various specialized medical fields with at least 20 years of experience. The board can only give their certification (or not) in presence of the closest relatives. Furthermore, the board’s certification is only preliminary.
• Once the board approves, the hospital has to inform the jurisdictional collector of the same. The collector will then appoint a separate board consisting of the Chief District Medical Office and three other experts from specialized medical fields. If this board approves the same, the chief medical officer will relay the decision to the jurisdictional magistrate who will then have to visit the patient at the earliest and authorize the implementation.

Any advantages of a Living Will?

• Providesrespect towards a human being’s fundamental right to live and die smoothly
• Doctors are likely to suggest appropriate procedures and medication knowing what the patient wantsas per his living will
• A living willspares both the doctor and immediate relatives from taking difficult decisions
• A living will could also spare the immediate family from the financial burden that comes up in cases of unnecessarilyprolonged medical procedures for a terminally ill family member

While Living Wills are common in the west, it is a very new concept in India. Although the general verdict, by and large is that this is a positive step in the right direction the complexity is still something that needs to be addressed.

 

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