Are you short of cash for an important purchase? Are you living your days off your income alone, but have nothing as monetary savings to keep your finances afloat during a time of cash crunch or emergency? If that is so, you need some serious planning on managing your funds. Here we bring to you 7 cash crunch alters that need to be looked into early, so that you do not land up in a financial fix.
- Are you always laden with late payment fines and unpaid bills?
If it is so, then you should pull up your socks and sharpen your organizational skills, particularly in the area of your personal finance. Maintain a monthly tracker, use an online calendar, and set mobile reminders so that you get alerts when your bill payment deadlines arrive. Sort all your bills and keep them in a folder at an accessible place. Your objective is to become methodical and punctual with your payments and you can choose any technique that would help you achieve the financial goals.
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- Do you overuse your credit cards and take loans excessively?
The golden rule for managing your finances has always been to keep your expenses less than your earnings. You must distinguish wisely between your necessities and luxuries. Think twice before you purchase anything too expensive via your credit card. Do not splurge. Ask yourself whether the item you are about to buy is on your list of priorities. If you need it too badly and it is a must-have, you should be saving for it. The fact whether you are able to save for it or not decides if you actually need it.
Too many loans or debts eat into your monthly expenses and hamper all kinds of savings, as you would need to pay off credit card bills and loan EMIs before you can think of saving anything. Save money and try to enjoy the gains from compounding interests. When you have a pile of money to sit on, you can indulge yourself by buying the car you have been fancying!
- Have you turned into an impulsive and obsessive shopper?
All the tempting shopping malls, supermarkets, designer outlets, and branded stores were launched keeping people like you in mind. If you feel that it is difficult for you to control your temptations, you should avoid these places when there is a lack of finances. One of the steps is to block the online shopping sites from your computer or other devices.
Do not stack your wardrobe, shoe rack, bookshelves, kitchen cabinets, fridge, or bedroom with things that you purchase without any rational reason. Keep a check on your cash-flow and maintain notes about what you spend and why.
Track your monthly bills with an excel tracker or a conventional accounting journal. Always retain bills and warranty papers of items that can be returned. You will be amazed at how much you can save with just a little bit of discipline!
Read More: 3 Ways to Tackle Your Habit to Overspend
- Are you a Debt Juggler?
Do you have a list of priorities for your debts? Do you clear your debts on the basis of how heavy the late charges / fees are about to be? Or do you clear them on the basis of when you need to use that particular service again? You need serious help, if this is the situation you are in. Try and curb your monthly expenditures.
Pay the dues off as fast as you can. Do not allow yourself to be in economically unstable position repeatedly! Cut back on the expenses you can avoid, and save the resources till you achieve better control over your money matters.
- Do your cheques bounce often?
If you have a habit of writing cheques without the surety that those can get cashed, you are in for danger. Bounced cheques fine you with hefty charges. Also such banking habits affect your financial history negatively.
- Do you have a habit of making late payments?
It can be as minor as a late fine for books or videos that you return late to libraries or as major as late payment charges that you keep on incurring on your EMI payments or credit cards. The former adds to your miscellaneous expenses and the latter leads to serious trouble. A track record of incurring late payment charges on credit cards and loan EMIs marks you as a defaulter.
Lending rates and interest rates can rise for you at an alarming pace, due to this unenviable track record, when you try borrowing in the future. Your credit defaults will keep on getting notified to CIBIL. Once they notice this default or late payment pattern in you, you will have great difficulties in getting a loan or credit card in future.
CIBIL tracks your credit habits and issues a credit report which portrays your repayment history. These days, banks keep a close eye on these credit reports and most of the loan decisions they make are based on the financial habits and stability of the applicant.
- Do you have no backup fund in place?
If you do not have a backup fund that would see you through in case of a sudden job loss or an economical crisis, you need to think about how you manage your finances. If you have no emergency fund for medical or other financial disruptions, it shows that you do not take your finances seriously and can land up in a money crunch situation any moment.
Ways to Handle Your Finances Smoothly
If you have been noticing the above-mentioned alarming signs, then you need to be careful and disciplined in how you handle your finances. However, you only need small and simple strategies like:
- Keeping a savings bank account other than your salary account. Make a fair estimate of your monthly expenses (curbed and controlled) and transfer the remaining monthly income automatically to this separate savings account.
- Keep the bank account inaccessible for routine expenses and curb all temptations to withdraw from funds you specially allot for savings.
- Moreover, try to formulate a budget and stick to it while you lock away your credit cards until your spending habits improve.
- Save up for emergency funds always and to meet crisis like surviving after job loss, try to retain a pool of funds that can last you for at least 5 to 6 months.
- Make important expenses such as purchasing insurance for home, life etc so that you are protected from untoward expenses.
Read the signs that you are going to hit a severe money crunch and implement the above-discussed rescue measures as early as possible.