| Cash Flow
Your cash flow is a combination of your income and expenses. You will typically have more control over your outflow of expenses. In the event that your income becomes unreliable, aim to reduce your expenses appropriately. | Cash on Hand
Open an emergency fund if you have not already. It is recommended to cover at least 6-months of living expenses in an easily accessible savings account.
Expenses
If you are looking to reduce your expenses, make a list of all your expenses, including credit card charges for the last 6-months. From this list, categorize each expense into an essential and non-essential category. Consider the expenses that don’t add positive value to your life, for instance, expensive meals out, or taxis and Ubers. Your money will go farther if you cut back on some of these non-essentials.
Income Replacement
It is always a good idea to have a backup plan. Understand how to market your skills and abilities to earn an income in the event your regular cash flow ceases to exist. Educate yourself on government benefits for which you may be eligible. |
| Family
You may have dependents, or certain monetary responsibilities within the family. If your income changes, these responsibilities can change too – talk to your family on how to manage their expectations of you. | Responsibilities
Similar to managing your expenses, you may be able to reduce some of your responsibilities by organizing them into categories: permanent/essential or can be re-allocated/cancelled.
Expectations
Let your family know what it will mean to them if your income changes. Try to have this talk before your transition, so that you and your family are prepared for how their lives might change, and how they can help you and themselves through the process. |
| Insurance
If you are transitioning from jobs or have a reduced income, some of the insurance benefit you were once entitled or able to afford may no longer exist. | Risk Management
Compile all the insurance that you are currently paying for, cost it out and attempt to simplify each policy to what you definitely need covered. |
| Investments
While you can’t control the markets, you can control the risk of your portfolio given your financial circumstances. If you find yourself in a different state of financial security, you should not be relying on risky investments to cover your living expenses. | Portfolio Adjustment
Meet with your Financial Advisor to discuss where your money would be invested should your income flow change or suddenly stop. Consider the risk level of your current portfolio and how you wish to invest moving forward. Ask yourself whether now is a good time to sell some stocks to store some cash in your emergency fund. |
