Budgeting is difficult when things don’t go according to plan. However, there are many ways you can manage your cash flow. Here are some starting points.
Review your situation
Best practice is to stick as closely to your budget as possible, but things don’t always work out that way, and that’s ok. Sometimes unforeseen expenses or emergencies can complicate your financial situation.
It is your ability to adapt and thrive through change that makes for sound financial management.
When you’ve blown your budget, review your situation to track your monthly progress, and – if you haven’t suffered an emergency or had an unforeseen expense – understand when, how, and why you have exceeded your spending plan.
Gaining insight into your spending behaviour can help you plan ahead. Some important points to ask yourself can include whether you spend more on wants instead of your needs, or whether you have miscalculated your usual expenses. You also need to review any contracts you have which could have recently accumulated a 10% yearly increase in their monthly costs.
If you need help to recreate or restart your budget, you can download our monthly budget template to get started.
Use your emergency fund
If you have established an emergency fund, this is the time to use it. Saving and setting aside an emergency fund gives you the power to manage your cash flow when your income or monthly allowance might fall short. If you find yourself really short on cash, using your emergency fund can help you settle debts and move back to your regular budget.
When using your emergency fund, budget and plan ahead just as you would with your regular income. Although this is money that you have set aside for emergencies, that doesn’t mean you should spend it without a plan.
Firstly, forecast how much of your emergency fund you plan to spend, and over how long you might need to access it. Once you have determined this, draw up a budgeting plan to ensure that, over time, you can repay these amounts into your emergency fund. By doing so, you’ll ensure that you have readily available cash the next time an unforeseen expense appears.
Sell unwanted assets
If you don’t have an emergency fund, or if it isn’t sufficient to cover the costs that you need to settle urgently, you will need to consider working additional hours to earn more income, or sell any unwanted assets that you might have.
Reviewing your assets and selling unwanted items can be a great way to quickly generate extra income to settle other debts or expenses. Consider selling items that you don’t frequently use or appreciate in your daily life. Many people, when selling unwanted items, will choose to sell old clothes that no longer fit, or furniture that doesn’t fit in your living space, or isn’t regularly used.
If you are facing large expenses that you need to settle, consider selling larger assets. Consider the size of your expenses, and review what assets you could sell to repay them. If you do not have any large unwanted assets to sell, you can still take control of your finances by exploring what credit options are available to you.
Understand what credit facilities you have available
Credit can be a powerful and effective way to manage your cash flow, particularly when you are facing an unforeseen expense. Borrowing means that you’ll have cash on hand to handle any emergency expenses. If you choose to apply for a personal loan, you can set how much you would like to borrow, over how long before you enter into an agreement.
It is important to understand, that there are several different credit facilities that you can borrow from – and knowing the difference and the right facility to choose can save you a vast amount of money.
For example, short-term loans are designed to help you manage your cash flow (usually over the period of a few days or up to several months) while with longer-term loans you repay smaller amounts over a longer period (up to several years). Understanding and managing your expenses over this period can help you understand which option is right for you – though a longer-term loan might offer smaller monthly repayment amounts, you will end up paying more interest over time as opposed to a short-term loan.
Understanding whether your loan is unsecured or secured can also help you evaluate your loans. A secured loan requires you to lodge an asset as a ‘security’ – that means, should you fail to make timeous repayments, your asset could be seized by your credit provider as they try to recover the amount they have lent to you.
Unsecured loans often have higher interest rates, but you will not run the risk of losing an asset should you fail to make regular repayments. This doesn’t mean that you do not still have the legal responsibility to make repayments on your loan, as not doing so can land you in serious legal and financial jeopardy.
Apply for a personal loan
If you need finance to take control of your cash flow, we’re here to help. With Wonga, you can apply for a short-term loan of up to R4000 with up to 3 months to repay if you are a new customer – and up to R8000 with up to 3 months to repay if you are an existing customer.
Before you apply, your total repayment amount is shown upfront – and you can even save on interest and fees by repaying your loan early.
If you’re ready to apply, the only document you’ll need is either your most recent payslip or bank statement showing that you have a regular form of income.
Get started with your application here.