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"Top Strategies for Managing Money in Tough Financial Times"


You might wonder why I am posting about personal finances when I am a business coach. The reality is money is money, and we develop habits around our finances personally that we bring into our businesses. We can only spend what we can afford, and realizing budgeting, monitoring our spending, and setting goals for ourselves and our businesses are directly related to how we manage our financial resources. These posts are aimed to help you both personally and within your business.



 




Dealing with Financial Stress
Financial Stress

Budgeting money is rarely easy, but it’s tough when you don’t have enough to pay all your bills. You might be between jobs or have a job that doesn’t pay well enough to address your expenses. Or your business may have shrunk and cashflow has now become tight. Either way, changing how you spend your money when you’re short on funds is important and essential.

 

Follow these steps for effective money management when you’re seriously broke:

 

1.      Be proactive. Don’t wait until the collection agencies start calling. They are relentless and aren’t known for being understanding. They only get paid when you pay them so that you can see their priorities.

 

  • Call your creditors as soon as you can see that you won’t be able to make a payment. You might be able to work out some sort of an extension or get reduced costs for a while. Reduced costs refer to a temporary reduction in the amount you need to pay, which can help you manage your finances more effectively during tough times.

 

 2.     Prioritize. Life is all about priorities. Could you look at your available money and then prioritize your bills accordingly? Your mortgage, essential utilities, insurance, and food will typically come first. These are considered necessary for your basic needs. Credit cards are usually last on the list, as they are optional for immediate survival.

 

  • Please consider the consequences of not paying each bill and decide.


  • Do this step after you’ve contacted your creditors. Your decisions might be different, depending on their responses. Now is the time to ruthlessly cut all your unnecessary expenses. This could include things like eating out, entertainment subscriptions, or non-essential shopping. Austerity has its time and place, and the time is now.


3.      Cut back on your savings plan. This might be the one time to stop saving part of your paycheck. The expense and ramifications of not paying your bills might be too great to cut yourself even shorter to make your savings payment.

 

  • You’ve always heard to pay yourself first, but sometimes that’s not appropriate.


  4.    Avoid relying on credit. Credit is a form of borrowing money you must pay back with interest. When cash is short, it’s a common practice to start using credit cards to replace a paycheck. However, the cost of this money can be incredibly high, and this debt is difficult to eliminate later on. Understanding the potential pitfalls of relying on credit as a solution to financial challenges is essential.

 

  • Consider how much you’re generally able to save and then project how long it would take to pay off this new debt. You already have more debt than you can handle. It doesn’t make sense to add even more to the equation.


   5.   Create more income. If you don’t have a job, take anything you can get for the time being. Consider adding a second job, which is a part-time job in addition to your regular job, or getting some overtime if you have a job you can. Overtime refers to the additional hours you work beyond your regular working hours, for which you are usually paid at a higher rate. If you have stuff lying around the house that you don’t need, it might be wise to sell it.


  • The less you fall behind now, the easier it is to catch up later. Falling behind refers to being unable to make your bill payments on time. This can sometimes lead to additional fees, penalties, and even legal action. Understanding the potential consequences of not managing your finances effectively is important and essential.


 


6.  Make a new budget. This might be the last thing you’re in the mood to do, but either your financial circumstances have changed, or your current budget isn’t working. Both reasons suggest that a new budget is required. Take a look at your income and bills and make some smart choices. Remember that it’s all about prioritizing intelligently.

 

In stressful times like these, it’s easy to succumb to your anxiety and not take action, but understand that this course of action will only make your challenges greater in the future.

 

Take a deep breath and do everything you can to get yourself back on track financially. You’ll be surprised how much you can accomplish when you really focus your intention and energy on solutions.

 

Remember, by prioritizing your bills, increasing your income, and making a new budget, you're taking the necessary steps toward financial recovery. With perseverance, things will start looking up sooner than you think.


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