The middle class is constantly plagued by fears of money running out suddenly. The rich have more than they justifiably need and the poor have so little that, for them, it is not worth worrying about.
Yes, it is very frightening to think that you have no more money, your credit cards are maxed out, your EMI’s are due, school fees, club fees, wages for home-help, groceries, etc have to be paid for.
You do not become poor and moneyless overnight
But except in a major global or national financial crisis, you do not become poor and moneyless overnight. It takes time for your financial resources to dwindle down and hit rock bottom. So don’t wait till you have your back to the wall – start protecting yourself from the start.
The best plan is to keep an eye on your finances right from the beginning. This way, you know how much you have in reserve at any point of time. If you find that your money is getting depleted faster than you want, then it is time to take stock and figure out what to do now. You have to get into what is called financial survival mode.
The first step is to calculate your income, expenses and debts like, loans, credit cards, etc. Prioritize your expenses and debts and pay the crucial ones – those that are absolute necessities (EMI on house/car, school fees, electricity, water, basic food, insurance, tax).
Ruthlessly cut out unnecessary expenses
Next, ruthlessly cut out unnecessary expenses such as gym/club membership – go for a run, exercise at home or in the park -cancel your 2nd mobile connection, if you are living in rented accommodation, try and shift to a less expensive one, give up using the 2nd car, use alternate transport – bus, metro, walk where possible, besides saving money, this will also improve your general state of health and well-being. Stop eating out, cook at home, it’s cheaper. Reduce electricity bills by switching off lights, fans, electrical appliances when not being used. There are many more ways you can find to cut down your spending.
Finally look for ways to earn money. Forget your ego, take up a 2nd job, it does not matter if you are over-qualified for it; it will bring you the money that you desperately need. You can make and sell handicrafts – online retailing is a good option. If you have extra space/rooms in your house think of taking in paying guests or tenants – register with organizations like Airbnb, Stayzilla which help travelers find places to stay.
Loans will only add to your liabilities
Taking a loan to help you tide over a financial crisis is not advisable –it will only add to your liabilities. Borrowing on your credit card is just as dicey – it will come back to bite you when you least expect it.
But, if in spite of all your measures you still end up on broke-street, remember that hardships strengthen your character, they make you rethink your priorities and restart matters from a different angle. It teaches you to be grateful for what you had and to be careful in future. In times of financial trouble you know who your true friends are and you get to know your capabilities and talents.
So stop worrying about running out of money – take steps to ensure that you don’t and if you cannot do that, for whatever reason, then see it and use it as an opportunity to become a stronger and better human being.