… I Have Too Much Month Left At The End Of My Money
We’ve all been there: It’s barely week 3 and you’ve gone over your spending allowance for the month. You might be in one of 2 situations:
1) You make a budget, you try to stick to it. You’re doing well, and then suddenly something unexpected happens. 2) You’ve just been naughty. You eat out all week and make that cheeky purchase (hey, I don’t judge).
But whatever the case might be, you’ve run out of money and there’s too much month left at the end of your money. It’s too late to tell you you should have saved more in an emergency fund and it’s too late to tell you not to have bought the pair of shoes that were on sale since you can’t get a refund now (or you’re too fond of them). So what do you do when this happens?
- Be wary of credit card debt:
Only put expenses on your credit card that you can afford to pay off at the end of the month. So if you won’t be able to pay your credit card bill the next month, look for an alternative. Some alternatives would be to borrow money from friends, family members, if you can. Hell, now is the best time to call up your debtors.
- Don’t pay to use your own money:
Withdrawing money from certain accounts such as a Registered Retirement Savings Plan (RRSP) if you’re in Canada or a 401 (K) if you’re in the U.S. usually comes with a big penalty. Instead consider using the money in your emergency fund or getting a loan with a low interest rate of 0 from your friends and family (if possible). Also, don’t be in a hurry to sell off stocks: If you sell off stock at the bad time you might lose a lot of money (buying high and selling low). In some cases, you might have to pay a fee for selling assets too soon (especially if you have a mutual fund or index fund).
- Prioritize spending:
With whatever money you have left over or you have been able to borrow make sure you prioritize your spending. Know what bills you have to pay first (mostly, taxes, essential utilities, car payments, insurance, credit card bills etc.) Be okay with saying no when friends invite you out. If turning your friend’s offer for lunch, drinks or dinner, puts your friendship at risk, then it’s probably time to re-evaluate the friendship.
- Fix your budget:
If you always run out of money before the end of the month, chances are your budget needs fixing! For example, if you keep on going over your $100 monthly grocery allowance it might be because your budget is unrealistic. Consider increasing the amount allocated to certain items and decreasing the amount spent in other areas. In order to make this happen, you might have to change your goals. For example, if you are currently saving 20% of your paycheck you might have to save less; if you are saving a lot of money for a vacation, you might have to save less and maybe postpone the trip. Although it is pretty sad having to change those goals, it sure beats being broke before the end of the month each month! Read this post on how to build a realistic budget that works for you.
- Find new sources of income:
If you are consistently running out of money and you have not been able to reducing your living expenses, then maybe it’s time to find new sources of income. In fact, I think everyone should have more than one source of income. The average millionaire has 7 streams of income. As the OG (read, king) of investing, Warren Buffett, says:
“Never depend on single income. Make investment to create a second source.”
There are many ways to make extra cash each month. You could create a side-hustle, work more hours, sell your stuff, and invest in the stock market. Also, take advantage of the sharing economy: Airbnb the extra room in your place; rent a free parking space; become an Uber driver; whatever works for you!
Whatever the case might be, it is important that you do not panic. Running out of money has happened to most of us at a point in time. However, if this happens constantly it’s time for you to reevaluate your financial decisions.
What do you do when you run out money before the end of the month?