Financial issues can be toxic for your health as this causes a vicious cycle of stressing about money and the stress causes illness and the illness has a financial impact, meantime we try to cope by overeating, alcohol; and drug abuse. And so it continues and your life is out of control.
Somebody once told me that you cannot solve money problems with money. It took the young me a while to figure it out. It is so easy… You need to identify the underlying issue that is causing the financial problem. And that is not too easy because it forces us to get out of our comfort zones, think outside the box, and most of all be honest with ourselves.
Let’s look at possible issues and the general reasons why they occur.
Suddenly you have no income or a lower income or are unemployed. 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.
* “ 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 beliefs 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 for 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 take to turn the inventory to cash, 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 anymore. 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.
Sometimes we tend to think that we are ostriches, to hide our heads in the sand and hope the problem will disappear. Unfortunately, that is not the case. 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. Remember you may feel that you are the only one that is feeling the financial crunch, but I assure you there are many individuals and business owners that are just plotting along.
Yes, I agree it is not a “lekker plek” to be but to be in control you need to take control.