How to Deal With Financial Crunches?
One should manage finance efficiently. Managing finance is supreme in financial planning. It is very easy for an individual to suffer with a financial crunch in the absence of proper planning.
Few ways of managing your financial crisis are:
1. Restrain unnecessary expenses: When you cut down your not so important expenses, you end up saving more. When you have sufficient money, spending on unnecessary things doesn’t seem to cause a problem. Make habit to purchase only those things which are essential are a good idea. It is always better to curtail unnecessary expenses even during good times.
2. Assign money for regular expenses: Based on your expenses pattern of the past, set aside money for all the expenses you can count and estimate beforehand. When you have extra inflow in any month, you can set aside money for expenses to help you in the times of need.
3. Adjourn your expenses: Analyze your expense pattern and see if any payable amount can be deferred to a later date when your cash flow position improves. You will realize that there are many expenses which are not critical and can be taken care of later.
4. Sustain a Contingency Fund: You must plan to maintain a contingency fund worth at least six months of your expenses. This will help you manage your expenses in case a financial crisis occurs. Remember to invest this corpus in a liquid fund which can give you returns and at the same time be withdrawn any time.
5. Monetize gold: If you are going through financial issues, you can look at monetizing the gold you hold. You can deposit gold with commercial banks in exchange for cash certificates which will give you fixed interest. This is based on gold holdings. Such a scheme will help you add an additional income stream and ease your finances to some extent.
6. Generate funds from friends and family: If you think you have some commitments which cannot be avoided, it is better a look for finances within your social circle rather than approach a bank for loan. It is often seen that people hesitate to ask for money from their friends or family. The fact remains that you will be paying more interest on a personal loan than on borrowed money from a relative or friend. Looking at formal sources of finance as last resort is a good idea.
7. Don’t disturb your long term investments: You must plan for your goals based on the time frame involved. You should not fund a short term goal with savings meant for long term. You should use your short term investments for your short term commitments only and use it for long term only as last resort.
Manage your financial crisis by cut back unnecessary expenses, maintain an emergency fund, save smartly to overcome financial difficulties.