Do you have the same question in front of you? If you are a college student, or fresh out of college, just started working, or still figuring it out, this article is for you. You might be a start-up entrepreneur or a small business owner.
You might be working your ass off, and still, you feel maybe it is not enough. You cannot generate enough cash, and even when you do, somehow, you end up looking for cash to meet your basic requirements. You feel stuck, demoralised. You had big dreams, and now the reality is struck, and it doesn't seem very comforting.
Well, I have good news for you. You are not alone. Almost 50-60% of newly employed or small business owners suffer. This condition arises due to poor cash flow.
Today, we discuss the reasons behind poor cash flow and how to fix them. I hope it helps.
In layman's terms, cash flow is defined as incoming cash and expenses. Cashflow is considered positive when your income is higher than the expense, but it is negative when your income does not mean your expenses.
Most beginners suffer from poor cash flow and find themselves under pressure on a regular basis. There could be many reasons behind poor cash flow. You must take a close look at all your income sources and expenditure.
Most beginners or college students do not care about finance management. Many people buy kinds of stuff without keeping track of their cash. In addition, they end up running out of cash. Spending a vital part of your income on recreational or fun stuff is not your responsibility. It is engulfing all your money and leaving you without money.
I should say lack of realistic budgeting. Many people do make a budget, at least in their heads. However, the budget they decide on is not realistic. For example, cut all the recreational kinds of stuff altogether from the budget. It sounds good but is not realistic.
Writing budget on paper and planning is missing altogether for most people. Ultimately it leads to disaster and puts you on the back foot.
The attraction of spontaneous purchases is extremely difficult to resist. The most prevalent reason people overspend is a lack of understanding of how much is enough. It is very easy to see a shiny thing and want to buy, especially when you have money in your wallet.
While some of us overspend by ignoring our income and savings, others spend money on impulsive buying rather than prioritizing their needs.
Unexpected expenses are ones that you were not anticipating. It could be a medical bill, broken windshield, broken appliance that needs repairing or need to buy a new appliance, etc.
Yes! Most people deal with unexpected expenses, especially now that taking out quick loans in Ireland has become very easy. Later it disturbs whole financial health. Everything costs money, and it feels much more in the pocket when it is unexpected.
Now that we have discussed the problems, let’s talk solution, shall we?
Setting a budget contributes to financial stability. Having a realistic budget makes it simpler for you to pay bills on time, develop an emergency fund, and save for big purchases like your dream home.
So, sit with a pen and paper or spreadsheet, whichever you are comfortable with, make a list of your expenses and compare it to the income, and set the world’s best budget that is going to make you king of your finance.
You should never be lazy when it comes to money. If you spend too much time learning to manage your money will pay off big time in the future. If your expenses are more than you earn, it will not help you save money.
Begin to cut useless expenses like subscriptions that you no longer need, gym membership, etc. You might also keep a spending journal and keep track of all the bills and other things you buy for an entire month; it will give you an idea to plan your finance better. Make a plan to save money.
If you are struggling with finances, here is an idea for you. Lease things you can, instead of running and taking out personal loans in Ireland, which are easily available to buy everything. A lease is an agreement between the lessor and the lessee where a lessor or owner of an asset lets you use it in exchange for periodic payments.
Lease has many benefits, such as 100% financing with leasing. So, your capital can be saved and used for your business or plans. Interestingly, leasing does not affect the current credit score.
The lease also provides tax benefits, and you have no ownership risks. It will help you meet your financial goals.
Saving might be the oldest finance trick, but investing is the smartest one. Investing is something that everyone should undertake if they aim for financial improvement at some point in their lives. Investing money has so many advantages.
Investing will get to the accumulation of wealth and financial security. Inflation will cause you to lose money in the long term if it is just sitting in the bank or your locker. You must put your money to work to have enough money to retire at your term.
There are many ways to invest, share trading, crypto, mutual fund. Pick anyone, talk to your financial advisor and begin.
Credit cards can be really helpful at times, but these are a serious threat to financial freedom if you can't control your expenses. Check your bills from the previous month, decide where the money is wasted, and minimise those. It will also help you build a better credit score in the future if ever you need to take out a personal loan in Ireland.
If you are always out of cash, you are not managing your finances well. So, its important to be observant. Don't overspend. Avoid using a credit card. Adopt good financial behaviour like saving and investing etc.