The financial difficulties usually don’t come knocking at your door; they rather just attack you like an unwelcomed guest or an intruder. These difficulties, in the context of finance, can originate due to various reasons such as unemployment, loss of job, accident or illness, addiction, retirement, large family or an entry of a newborn member in a family, retirement stage or self-independent for the first time.
Lliving with the struggle will only further pull you down in a whirlpool of difficult situations that will not just restrict your normal activities but, in turn, might hamper your daily routine and result in losing on whatever savings or resources you are left out with. Better open up, face the difficulty and feel free to approach a credit counsellor or debt management programs. As the saying by Nicolas Ling goes “ignorance is a voluntary misfortune” and so is the case with financial struggle.
Financial difficulties arise due to a condition, wherein a restriction or an overflow of movement of cash is observed or realised. For control of the cash flow, prioritize your expenses that are required to be cleared either on an immediate basis or holds interest on failure of repayment or cancellation of service. Few examples for this type of cash expenses include:
Planning of cash expenses is executed by framing of ‘cash flow tabulation’ that is amount obtained by deducting the ‘overdraft balance’ from the ‘cash in hand’ and a record of this amount is maintained on a monthly basis. Planning your cash expenses also involves budgeting the outflows. It can be compared to a swimmer who takes all the necessary precautions that would keep him/ her safe while enjoying the swimming and at the same time makes sure that no harm or the least damage is caused in case of any adversity. If not prevention, it does help to dodge any major setbacks that may occur due to cash flow trap.
Better cash management leads to prevention of future financial challenges. Raise an invoice with immediate effect on completion of a work, so that credit is received at the earliest. Also, follow up should be done to ensure that timely earning is received once the invoice has been generated. In case of a business set up, planning on ‘working capital budget’ plays a crucial role in determination of the how far it needs to wait to obtain its revenue. This in turn leads to understanding the effect that the waiting period for obtaining the revenue is bound to create. ‘Profit first concept’ secures your profit at the initial stage itself so that the entrepreneur will be left with some earning for himself. This in turn takes care of the owner’s earning beforehand wherein he understands how much minimum expense will lead to his maximum profit under known circumstances. Several software tools have been devised for estimation of budget on monthly basis like YNAB that helps you gain control of money by employing each dollar a task with respect to expenses made, prioritizing the expenses and in exchange of balances by making necessary adjustments in the budget planning. This results in aging of money that leads to further savings.