Let’s be realistic; adulting is hard. Yes, as a millennial grown-up, being financially independent is exhilarating – buying anything you desire, going out for a weekend brunch, clubbing with your friends, enjoying holidays, and leading a comfortable life. But there is a not so charming side to it as well. Millennial adulting comes with a ton of responsibilities; the most significant of it is managing your finances. If gone astray, it will have you shook and possibly in a cash crunch!
Here we will discuss a few important tips to manage a cash crunch and how to make sure it doesn’t happen again. So read on!
How to slay a cash crunch?
Mismanagement of cash can escalate in a number of ways. You may have gone overboard shopping and now risk falling behind on your monthly bills. This may sound like it won’t happen to you but the reality of it is that a cash crunch is imminent.
So, how can you stay on top of your expenses?
The answer lies in the art of managing your finances. Make your budgeting spreadsheet your best friend, and you will be prepared to dodge unnecessary stressful monetary situations.
However, life is full of shocks. You could plan like a pro and still find yourself facing an unforeseen cash crunch. It could be an unfortunate medical emergency or an unexpected personal commitment.
The first step to take in such a situation is to stay calm. If you panic, it will make things worse. Instead, reflect on where things went wrong and what can be done about it.
What you need is an actionable plan. The below steps will help:
Steps to take when in a cash crunch.
Funnel down your expenditure.
Highlight important expenses and keep the non-significant expenses on hold. Paying utility bills, phone bills, purchasing groceries should be the top priority. Whereas frequent dining, shopping, enjoying movies, indulging in an expensive sport, etc. can wait.
You can also highlight the monthly recurring expenses like OTT Subscriptions (Netflix) and Amazon deliveries. These would need to be kept on hold during a cash crunch.
List avenues of liquidity.
If you require a substantial amount of cash instantly, consider liquidity options. This can be breaking your Fixed Deposits, redeeming mutual fund investments, or taking payday loans from a reliable lender, such as Finance 27. Pick an option that best fits your situation in terms of interest paid and restitution.
Things are changing in 2020 and beyond. Unlike before, getting urgent cash is possible now, thanks to payday loans.
These loans are usually valid for one to three months, with the loan sum equal to your salary. This option is ideal where you require an immediate small loan (20-30% of your salary), and you can pay back the entire loan in the subsequent month.
Small lifestyle changes can have a big impact.
Try to save costs by tweaking your lifestyle without causing too much discomfort. If you drive your car often, try to carpool with colleagues or catch the bus or train a couple of times a week. Try buying from wholesale shops and keep your eyes peeled for discounts.
If you are used to partying every Friday night, try changing that habit by inviting friends over to your place. You will be surprised at how much you can save every month.
Look at your debt.
Take a look at all the debt you have – it can be credit cards, student loans, or car loans. Make a list of all of these and plan out a payment schedule.
A great tool to use to do this is a debt snowball spreadsheet. The debt snowball spreadsheet is easy to understand. It breaks down debts into a simple payment plan.
Next time, when you are stuck in a cash crunch, remember to follow the tips mentioned in this article. Especially payday loans, as they are issued instantly and can help you pay off urgent bills and rent. Moreover, these loans can improve your credit score to help you get a mortgage or car loan in the future with ease.
For more personal finance related article, visit this section of the blog!