Keep calm and handle a cash crunch like an expert

Synopsis:

• Managing a cash crunch requires prioritising essential expenses, exploring liquidity options, and making small lifestyle changes.
• A solid budget and timely financial planning can prevent stress and help you get back on track.
• Credit Cards can assist in managing expenses and building a strong credit score.
  
  

A cash crunch occurs when you don’t have enough money on hand to cover your expenses, forcing you to convert non-liquid assets into cash. This means you may struggle to pay bills, buy essentials, or manage day-to-day expenses. Well, we don’t want you to be salty about life, so we are about to give you ten tips on how you can take care of your finances beautifully while managing a cash crunch like an expert if you ever find yourself in that situation.

How to Slay a Cash Crunch?

Mismanagement of money can escalate quickly. Missed making a payment for a month? That is an added burden plus interest to be paid in the subsequent month. Shopped too much? It may mean you don’t have enough left for essentials.

So, How Can You Stay on Top of Your Expenditure?

The answer lies in budgeting. Make the budgeting excel sheet your best friend and you will be able to avoid unnecessary stressful situations.

However, life is full of surprises. You can budget like a monk on a mission and still find yourself facing an unexpected cash crunch. It could be an unfortunate medical emergency or a sudden personal commitment.

The first thing to do in such a situation is not panic. Just breathe, take a step back and think of what you can do to beat it.

What you need is a solid plan. Here are a few things that you can give a shot:

• Prioritise Expenditure: Pick out vital expenses and keep non-essential expenses on hold. Paying utility bills, phone bills, buying groceries should be the top priority. The latter would include eating out often, shopping, watching movies, indulging in an expensive sport, etc. You can also identify expenses that get deducted from your bank account every month. These would not have mattered earlier, but they need to be cut off in a time of cash crunch.

• Figure Out Avenues of Liquidity: If you need a substantial amount of cash immediately, think of liquidity options. This could be breaking FDs, redeeming mutual fund investments, taking a loan on your credit card, mortgaging gold coins or Jewellery, taking a personal loan, etc. Figure out which option is best suited for you in terms of interest paid and repayment ability.

• Make Small Lifestyle Changes: See where you can save costs by changing your lifestyle without causing too much inconvenience. If you travel to work by car, figure out a way to carpool with colleagues or take the train a few times a week. If you shop at upscale supermarkets, start shopping at discount/wholesale shops.
  
  

Unleash the Magic of HDFC Bank Millennia Credit Card

Many young millennials hesitate to get a Credit Card or worry they won’t be able to manage one responsibly. However, with the right approach, your Credit Card can become a powerful financial tool.

Start by understanding your billing cycle and payment due date. Strategically spreading out your purchases can help you maximise the 45-day interest-free period. As long as you pay your bills on time, there’s nothing to fear—Credit Cards can actually help you avoid cash crunches rather than cause them.

Beyond convenience, Credit Cards play a crucial role in building your credit score. Your spending habits and repayment history directly impact this score, which can determine your ability to secure loans for a car, home or personal needs in the future. The earlier you start, the stronger your financial foundation will be.

What’s Next?

Once you have overcome a cash crunch, the next thing to do is make contingency plans to avoid another one in the future. Use HDFC Bank Millennia Credit Card intelligently to balance expenditure and payment.

Take your monthly income and work backwards. Allocate funds for basic expenses. Next work on creating an emergency fund invest in life insurance and medical insurance. Set aside an amount for SIPs. From the remaining income, take an amount for travel, entertainment, shopping, etc.

Manage your finance with Millennia Credit Card, apply now!

Read more about the different Millennia Credit Cards available here.

*Terms and conditions apply. Credit Card approvals at the sole discretion of HDFC Bank limited. Credit Card approvals is subject to documentation and verification as per Banks requirement.