There are few times in life that are more humbling than when you simply don’t have the cash; however, the reality is most everyone has been there and knows how it feels. What we might not realize is just how much that experience can teach us about money management so we can avoid getting back to that place.
Daily cash management
Scenario: you check your bank account and see a balance that is much, much less than you anticipated. Maybe you’re working with less than a hundred dollars and you’ve got at least a week until your next paycheck rolls around. What do you do now?
If you’re like me, the first thing I did was think “Let’s do the math.” I’ve got $100 left and seven days until I know I’m going to get some money in my account so I can only spend around $14.00 a day. You know what that means, it’s crunch time.
Just because you have a certain amount available to spend each day, doesn’t mean that you should. Eating at home and bringing lunch to work, avoiding wasting gas with outside travel other than work and home, no frivolous convenient store spending or unnecessary shopping, period.
Inevitably, a weekend will fall within this time frame and that is when it can be really tempting to spend what you have. Avoid this by distracting yourself and planning out something productive to do that is free and can take up a weekend. For instance, this is a great time to finally deep clean your home or apartment or simply enjoy a quiet, no-expense weekend on the couch.
Also, with that free-time and since you need some cash, it’s a great time to purge some things you don’t need/want anymore. Listing items for sale is free using Facebook marketplace or Craigslist is an easy way to get an extra $50 – $100 to help tide you over until payday.
If you’re short on cash and you have a stack of bills waiting to be paid, it’s time to strategize. First, sort into “wants” and “needs”. Don’t get me wrong, all outstanding bills need to be paid, but some you can afford to be a few days late.
Any bills that are vital to your daily life must be paid first. Think your rent or mortgage payment, car payment, utilities at risk of being turned off or any payments that incur a hefty late payment. Bills that can wait are a cable bill, phone bill, etc.
While it’s okay to prioritize payments, it’s not okay to completely ignore payments. Once you receive your next paycheck make payments on the bills you’ve delayed, first. That way you’re caught up and not putting yourself into a worse financial situation that you will have to deal with down the line.
Ask for felp
Money talk is sensitive, and it can be really difficult to ask for help. Please know that there is no shame in asking for a helping hand and that there is more way to ask for assistance.
First, asking a family member or trusted friend for some cash to get you through to your next paycheck. Be clear about repayment terms and even offer to pay interest as they’re doing you a favor.
Second, put your skills to work! Offer to mow your neighbors’ yard for a small fee or ask if you can help them with projects around their house for payment. You could even put up a post on Facebook advertising that you’re looking for a little extra work to see what kind of traction you can get.
Third, are there organizations in your community that offer some sort of financial assistance for families? This could be as simple as a free meal put on by your local church or non-profit organization that provides a helping hand to those in need.
Value of a dollar
When you’re flush with cash, it’s easy to be flippant about small $1 – $5 expenses. It’s only in situations where literally every dollar counts that you realize the value of a dollar.
Carrying this mindset with you regardless of how much is in your bank account will help you start putting more thought into your purchases, ultimately leading to savings. The #1 recommendation to saving money is cutting out small expenses like that daily coffee or convenient store run. While this will help, I always think that it should be encouraged to cut back instead of cutting out. Treating yourself is necessary and acceptable, but it stops becoming a treat and starts becoming a habit if it’s happening daily.
Save that coffee run for Friday morning to celebrate the weekend or Monday morning to get the week started on a high note. Being aware, and ultimately editing, the small, daily expenses throughout the week will have a big impact over the whole pay period.
Learning from mistakes
Spending any amount of time stretching the cash you have is stressful. However, we tend to forget just how cash-savvy we can be as soon as our next paycheck rolls around and the anxiety is gone, which is how we could find ourselves in the same situation again.
Albert Einstein defined insanity as, “doing the same thing over and over again and expecting different results.”
The same principle is applied here. If you found yourself in a financial jam, not being able to pay your bills or forcing yourself to live off very little for a period of time, because you were frivolous with your money one time, it would be foolish to expect a different outcome the next time.
Instead of getting your paycheck and immediately reverting to making unnecessary expenses, ask yourself, “is whatever I’m buying worth the stress and anxiety of not having money later?” If the answer is no… well, you know what to do. (Hint: don’t buy it!)
We exist in an instant-gratification society. We know what we want, and we want it right now. This can and does lead to us making spending decisions that don’t fall within our financial means. Stretching available cash, learning from past mistakes and avoiding getting caught up in “wants” will help you stay financially solvent year-round.