Do you feel the financial crunch?

Somebody once told me that you cannot solve money problems with money. It took the young me a while to figure this out. It is so easy… You just need to identify the underlying issue that is causing the financial problem. It is not easy to get out of ones comfort zone, to think outside the box and most of all to be honest with oneself.

Let’s look at possible issues and the general reasons why they occur.

* Suddenly you have no income, or a lower income.

*  Accidents and illness come when least expected, the increased medical expenses can have a devastating effect on the finances.

* You want to show off how successful you are and in the meantime, you do not sleep at night because of the stress to pay the debt.

* New parents often do not keep the increased expenses in mind, many parents can speak from experience here.

*You got the house as part of the divorce settlement, but are struggling to keep up with the expenses with only one income.

*Maybe you retire and can no longer afford to live the life you use to.

* Sometimes we know that we need to part with something we can not afford, but the emotional attachment prevents us to do so.

 *Lastly, you may be addicted to something and you spend more than you earn to satisfy the addiction.

Identifying the issue will help you to implement new habits to break the cycle.

We also need to let go of our attitudes about money:

* “ If only I had more money”

*  “ I deserve a treat”

* “ It won’t happen to me”

* “ I will fake it, till I make it”

* “I can’t afford it”

Our self-talk has power! Become aware of what you are saying to yourself about money and challenge that belief. Working on changing negative believes to positive ones.

Declutter the budget. To be realistic is crucial. Take the last three month’s bank statements to determine where the money goes. Investigate if the money is flowing to your priorities. That said, do you know what your priorities are? It can be to pay off the loan, to save for a deposit, or a long-overdue holiday.

Simplify your life and business. Ask the tough questions. Determine if your perceived need is not a want. Is the location of our office important? How can we save on electricity and internet expenses? Do we really need to buy the more expensive car and do we need to eat out every weekend? Is the emotional attachment to that thing worth the sleepless nights?

As a business owner, you must know what the working capital cycle in your business is. In other words, how long does it takes to turn the inventory to cash, and the time it takes for your debtors to pay you, and lastly how long does it take to pay your suppliers. This cycle requires careful management, as it can influence your cash flow immensely.

You also need to think of how you are going to increase your income if you can not lower your expenses any more. Apply for a job, take a second job or start a side hustle.

Business owners need to be aware of how much sales are needed to break even. There are two strategies to follow to increase income. The first one is to increase the sales price, the second is to increase the volume.

Hold yourself accountable. Compile your budget, but most importantly compare the budget with the actual figures to ensure you are still on track to spend the money on the priorities you set.

Like Ostriches we hide our heads in the sand and hope the problem will disappear. Rather Tackle the financial issue head-on. Contact the bank, supplier, or accounts manager and explain your situation. Renegotiate the terms but most importantly stick to the agreement.

Get professional help. You may feel that you are the only one feeling the financial crunch, but I assure you there many individuals and business owners that are just plotting along.

 Yes, I agree it is not a “lekker plek” to be but  you need to take control!