Tip Tuesdays: Why You Should Cover For Your Household Expenses A Month In Advance?

by Vinaya HS on August 10, 2010

in Finance

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I’ve previously written about how to cover for your household expenses in advance especially if you’re not paid on the last working day of the month. This technique also proves useful in a few other situations:

  1. When there is a delay — for whatever reason, be it salary processing, bank holidays, and such — from your employer in crediting your salary, and
  2. When you resign from your job and you don’t receive a salary credit for that month but instead receive a final settlement a few weeks later.

I personally am going through #2 — I won’t have a paycheck in July and my next paycheck will most likely be near end-September. The cash cushion that I have in the form of one month’s expenses is a life-saver. You can, of course, meet these obligations by dipping into your emergency fund or from your free cash flow, but I prefer having both one month’s expenses and an emergency fund as my buffer.

What do you think? What would your approach be?

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

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