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:
- When there is a delay — for whatever reason, be it salary processing, bank holidays, and such — from your employer in crediting your salary, and
- 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?
[sniplet tip tuesdays]