Financial challenges and difficulties happen to people at one point or another in their lives. When you start managing your finances, whether you’re starting a new relationship, having a baby, or buying a home, you may face a few struggles. With the pandemic, more people are going through financial difficulties due to losing jobs.
The idea of solving your problems is to pinpoint the root cause of the issue and address it at its core. If you ignore it, it will complicate your future, and you may sink further into debt.
Are you having trouble checking for areas in your finances where the common issues happen? Here a few of them worth looking into. This is a list of a few common money challenges and their solutions that may help you get back on track.
Cash flow issues
If you receive your paycheck once a month, you may experience instances of feast and famine financially. This is especially if your bills are due at the start of every month. You find that you spend all your money paying bills during the first and the second week, and then you’re left struggling the remainder of the month. Waiting on your next paycheck to get by can cause a lot of stress and anxiety.
Solutions:
- Better planning of your finances is the key to addressing this problem. Regardless of when you receive your money, it’s essential to set aside money for the times when you don’t have money.
- If you receive your money once a month, divide your cash into weeks and save the rest into a savings account. This means creating a system for yourself that resembles receiving payment weekly.
- Transfer the funds from your savings account into your checking account every week. This will control your spending and avoid overspending.
- If you experience an emergency and payday isn’t near, you can use payday loans online to get a loan to pay off a crisis, and then repay it later when you receive your paycheck.
- You can also contact your utility vendors and creditors and see if they can change the dates due on bills. Some companies can work with you and distribute due dates evenly throughout the month.
Expenses exceeding your income
This is a problem that most people don’t realize they have until they sit down and do their budget for the first time. Living beyond your means makes you sink into debt even more. Sometimes, the solution may be to cut back on your expenditure, but sometimes, lack of enough income is the problem. It’s essential to find a permanent solution to this problem.
Solutions:
- The first step you can take to fixing this problem is to stop all unnecessary spending for a while. This will help you get a handle on the issue. Remember that necessary expenditure includes food, shelter, healthcare, essential utilities, and transportation.
- Track your expenses by writing everything down, so that you know where you’re spending your money. This will help you cut off all the unnecessary things you’re spending money on. It will also ensure you’re living within your means.
- Look for other ways to increase your income. Ask for a raise or promotion or look for a better job that pays better. You can also have a side gig where you can earn some extra cash. Increasing your income will also help you pay your credit card debt and better manage your financial situation.
Debt
Many reasons can cause you to be buried in more debt than you can afford. Maybe it grew gradually from unnecessary purchases, overusing credit cards, or perhaps you had an unexpected medical emergency that you need to pay off. There are several approaches to paying down debt, but they all involve stopping the use of your credit cards while trying to get yourself out of the problem.
Solutions:
- If you have many debts you need to pay, and the total of the monthly payments is more than you can afford, you can consider consolidating all the debts into one account with a lower monthly payment. For debts on credit cards, you may be able to transfer balances, but you may need a debt consolidation service for more complex situations.
- Target the debts with the highest interest rates first to best limit how much you need to cut back on your expenses to get out of debt. However, if decreasing the number of accounts you’re paying on is your goal, and you haven’t consolidated the debt accounts, target the lowest balances first to quickly get them out of the way.
- If possible, seek the help of professional financial advisors.
Unemployment
Job loss can happen to anyone and at any time. When COVID-19 hit, so many people found themselves with no jobs, and some businesses had to close down and send employees home. The impact was devastating on the financial situation of people. Some received some relief from the government and their companies. While it was helpful, you still need to cut back on your expenses while looking for alternative income sources.
Solutions:
- Eliminate all the unnecessary spending, stop ordering takeout or eating at restaurants, and start preparing meals at home. Cancel expensive subscriptions. You may also need to trade in your car for one with lower payments. You may be forced to move out of your apartment and into a cheaper one in some extreme circumstances.
- Use your emergency funds if you have them. If you’ve diligently been putting some money aside for such an emergency, use them.
- Start looking for another job. Set a weekly work schedule to look for opportunities; write cover letters, update your resume, and send to prospective employers. Stick to this schedule the same as you would a work schedule.
- Look for a side gig like freelancing while finding another job. During the pandemic, many work from home opportunities came up, which opened up so many options for people to earn some income online.
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