Running out of money by month-end is a common phenomenon . In order to get out of the financial crisis faced during the end of the month, you need to have a budget. A fixed budget will help you reconcile your income with expenses. Not having a budget will let your spends get out of hands, leaving little or no money at month-end.
To get rid of this problem, you need to prepare a budget, differentiating essential spends like paying bills, EMIs, flooding expenses, house rent from discretionary ones like dining out, watching a movie etc. Once you provide for all essential expenses, you can know how much you are left with for discretionary expenses. This will help you bring discipline in your spending habit.
Worth mentioning here is that you need to put 20-30% of your income every month in an emergency fund, which you should not use other than in an emergency. Financial planners say you need to have an emergency corpus of at least six months of salary so that you can face situations like job loss, medical treatment of family members without any additional borrowing. Last but not the lease is aligning your expenses with your income.
The following things in order to avoid situations like running out of money by month-end:
- Don’t use credit card to fund expenses which your income does not permit. If you can’t pay the full bill every month, this will land you in a debt trap.
- Don’t spend in advance expecting a pay hike in the near-term. “If discretionary spends are the reason you run out of money, a higher salary will just mean more disposable income to spend. You will still run out of money,” the business daily said.
- Don’t dip into emergency fund for discretionary expenses. This will leave you without fund for real contingencies.
- Don’t take risk to make extra money. If you gamble, buy lottery or do intraday share trading to make a quick buck, you are simply trying to ward off a smaller evil with a bigger evil.
- Don’t miss EMIs, insurance premium, SIP to do impulsive spends
Few Tips That Will Keep You ‘Un-Broke’ Without Much Effort
1. Automate Expense Monitoring
Millennials are digital people. We don’t like to do things manually, but digitally. We want to leverage technology to get our work done, if not entirely, then at least a significant part of it. So why not put this habit to better use? Today, there are a slew of apps available on iOS and Android that are specially designed to assist and monitor one’s spending habits. These apps notify and even prevent you from making extra online purchases. No harm in trying it.
2. Switch to Public Transport
A habit of complete dependence on rental cab services is easy to develop but very difficult to get rid of. Although they usually offer discounts and cash backs, we still end up spending a lot more on commute than required. Instead, adopt the good habit of using public transport.You can also use Car pulling, purchase a monthly bus pass or metro card to save some money and the environment.
3. Ask Friends or Family
Friends or Family members are often the best choice for helping you with an unexpected expense. Asking will always feel a little awkward, but to make it easier, be honest about why you need the money. Sit down and have a serious discussion with your them about how much money you’ll need and how you’ll pay it back. Put the agreement in writing to make sure both you and your friend or family feel comfortable and understand your situation.
4. Cut Down on Outside Food/Drinks
If technology has done one thing really well, it’s making food ordering simpler. Food delivery apps have made it a breeze to order whatever we wish to eat whenever we want. Plus, special discounts make it even more attractive. No wonder Millennials are ordering in more frequently than ever. But here’s a piece of sage advice – instead of risking your health with outside food, try having homemade food more often. Ordering your favourite food once in a while is ok, but making it a habit means saying goodbye to health and money both.
Avoid going to Bar or Pub which will save you more money that can be considered at the time of need.
5. Get a Personal Credit Line
A Credit Line is your reserved pool of money that you can use anytime. We live in the best time; thanks to technology, no bank visits or paperwork is required to get access to credit anymore. Fintech companies are providing quick, easy, and hassle-free credit on the app within minutes. Just download on your the Android or iOS phone and apply. Withdraw any amount from your approved limit as per your need, and repay in convenient EMIs. Interest is charged only on the amount that you withdraw, not on the total approved limit. Get a Credit Line today and be money-ready, always.