A lot of people are running up short on cash that it is sometimes seen as the norm rather than the rule. Though it is true that the economy is dependent on the buying power of the people, this does not mean that everyone should go out and purchase whatever they need. You might even even get cheeky with it and say you are buying for the economy.
Taking control of your household budget is easier said than done but that should not stop you from pursuing a strong financial position in life and you should start by fixing your shortcomings at present. You cannot venture into investments, you cannot save for our retirement fund or even pay off your debts in you keep on running short on your funds month to month.
It is similar to an athlete who dreams of making it in the professional leagues and playing in front of adoring fans. To make this happen, he needs to train hard and practice hard to reach a competitive playing field. But along the way, he cannot practice or train as much and always running short on time which could cause him his dreams of turning professional.
What you do today can affect your dreams and plans for tomorrow so if consistently run short on cash at present, it would be a big challenge for you to get to your financial goals down the line. Add the fact that CNBC.com recently shared an article how one in eight Americans are willing to take about $1,000 more in debt just to portray an extravagant lifestyle. Add this mentality to an already low budget and you get a multitude of financial problems.
Things to do when you are short on cash
If you are already in this situation, here are a few things you can look into and consider to help get out of the hole you are in and start fixing your finances.
- Accept that you have a financial problem. The denial that you are not running short on cash can lead to more problems along the way. You need to accept the fact that you have been trying to make ends meet and that you are living from one paycheck to another oftentimes coming up short. You need to be mature enough to accept the fact that there are issues that you need to take notice and act on to better improve your financial status. Going on with as if nothing is wrong would only compound present issues and lead you to bigger problems along the way.
- Define your financial priorities. As you try and figure out your next step, you need to define your financial priorities as well. You might have done this already in the past but it would be nice to brush up on your list once again. If you do not have one then this is a perfect time to come up with the financial list you want to prioritize in life. It can be paying down debt, saving up for a down payment on a house, curbing your credit card expenses or simply looking for a new higher paying job. The important thing is you list down your financial priorities and lay down a concrete plan on achieving them.
- Boost your earning capability. If you are running up short on cash, your earning capability has a lot to do with it. Foxbusiness.com shares that the average salary in the country for 2013 was about $51,000. You need to understand that this is not the minimum amount people are getting. There are people getting more than this but more importantly, there are a lot of consumers getting way below this amount annually. This is why increasing your earning ability is important to help address the lack of funds in your budget. You can either look for a second job or find ways to earn off of your hobby.
- Trim down your expenses. You might be wondering why you are still coming up short on cash even while fetching a high annual salary. You could have a nice high paying job, a big house and the latest car but you are still having a hard time managing your finances. You need to audit your expenses and see if the money going out is more than the money you are bringing in. If this is the case then no matter how much you earn, you will always run short on cash.
Keeping away from financial problems
If you have already managed to get your finances in order, here are a few things you need to keep in mind to keep problems at bay and not have to try and stretch your paycheck from one month to the next.
- Consider the financial benefits of investments. One of the things you can do is to make your money work for you by considering investments. As you put your money in a savings account, you are just safekeeping it with very minimal return on it. There are a lot of investment opportunities for you so your money can grow bigger overtime. You can also chose to invest on yourself and increase your skill level by taking classes and crash courses on specific topics. This can help you get a salary increase or find a way to earn off of your hobbies at home.
- Increase your reserve funds. One way to increase your chances of getting through a rough financial patch is to increase your reserve funds. Your emergency fund and your rainy day fund will help you cover any unforeseen financial need in the future and help you deal with problems at hand without having to compound them. If you are already running short on cash, your reserve funds would be a great cushion to get you through without having to take out a loan.
- Diversify your income. If you have been relying on your salary all these years then it might be time to look at other funding sources. If you love baking then try making some cookies over the weekend which you can sell to family and friends. If you love taking photos then offer your services on weekends and cover events. You can also take some photos and sell them online as a passive income for your budget.
- Guard against lifestyle inflation. Forbes.com explains that this people’s tendency to spend more as they earn more. There is nothing wrong with buying the things that you need and want but you must remember to cover the essentials first before you dive into other expenses. It is also a good idea to try and live with the same budget and put the extra funds into savings and investments.
No ones wants to run short on cash because it affects your household budget and your financial goals for the future. You need to address this situation so you can be in a position to reach your financial dreams. If you want to pay down your house in just a few years, you would be hard pressed in doing that when you cannot even make it paycheck to paycheck. You might want to start a business but if you cannot even manage your household finances, you might have a hard time with that of your business.