For many people reaching “towards the end of paycheque” means having a cash crunch and flailing to stay buoyant. Such a situation seldom arises if one is habitual to creating a budget and adhering to it. If you’re here because you have already exhausted your current month’s saving and are looking for a way out, the following actions might help you out:
Assess your situation
Sit back and objectively assess your financial situation, you may write down the significant details to support you through this step. Calculate how much you have left and estimate the difference between your receipts and how much you need to spend to survive the month. This will act as a lighthouse to steer your actions towards a goal and guide you on what actually has to be done.
Following this, jot down all the expenses and bills with an approaching due date and prioritize them on the basis of urgency, need, and importance. Track your spendings and make cutbacks if necessary. Categorize needs and wants and retrench spending on wants if necessary.
For example, if you have to pay your rent by 31st and your annual TV subscription renews on the same day, you may prioritize and postpone renewing your subscription until next month but if you have a strict landlord, delaying paying your rent will probably not be possible. You can also look for discounts and places where you can get your utilities for a lesser price to reduce cost.
Try to earn extra
The alternative to spending less is to earn more. If you absolutely cannot make any cuts from your expenditure you may seek new sources of income to earn some extra cash on the side. You can do this by freelancing or through a secondary occupation, working part-time at a company, etc.
Relinquish on saving for the month
If you have been following a fixed budget structure like the 50/30/20 or a similar rule wherein you save a predetermined amount of money every month, you can opt to give up saving for a month if you’re in crisis. There’s no point in saving money and accumulating debt when you cannot make ends meet. You can cover this gap in your reserve steadily in later months by saving a little extra.
Resort to your emergency fund
When no other option is available it is advisable to make use of your nest egg or even liquidate an investment asset to fulfill your needs rather than choosing borrowing as a recourse. Only the amount that is required to persist should be taken out. Don’t forget to rebuild your emergency fund when your financial situation improves.
Review your budget
Once you get out of your financial trial, it is time to review your budget structure and identify problem areas. If your budget was ideal you wouldn’t have landed in such a situation. So revisit your budget and recognize where it dwindled.
Ensure that you’re not making any of the common mistakes such as building the budget around pre-tax income. Consult a financial advisor if you’re not able to form the right budget after multiple struggles.
Living paycheque to paycheque can be stressful and draining. An accurate budget is the best instrument to fix your financial leakages. If towards the end of the month you’re fighting to persevere it is advisable to prioritize, cut back on unnecessary expenses, and employ better management techniques.