How To Never Run Out of Cash Ever Again

How To Never Run Out of Cash Ever Again

In this article, I will be showing you incredible ways to take charge of your cash flow, and how to never run out of cash again. Sounds great, right?

Effective money management always starts by distinguishing the difference between assets and liabilities, and Robert Kiyosaki has the best definition. “Assets put more money in your pocket and liabilities take out of it.” – Robert Kiyosaki.

Understanding that simple phrase could pave the way to understanding exactly why you run out of cash. And this article would guide you to being able to handle cash and not blow it off like the wind in no time.

Knowing the source of a problem is very important in tackling the problem itself. So, I’ll be dividing this article into two;

  1. Why you run out of cash
  2. Tips for gaining control over your finances

1. Why You Run Out of Cash.

There are certain reasons why you always run out of cash that once those issues are addressed, the money issue comes to a screeching halt. That’s what we’ll be addressing here in this section.

1. Earnings < Expenses

That equation interprets “earnings less than expenses.” You earn $10 per day and manage to spend $11 every day, you are bound to live life broke. Yes, pretty basic right?

But the truth is this, most people haven’t still understood how spending more than you earn actually affects one’s finances. And usually, it’s because of at least one of the next two points in this section.

2. Spending out of emotional Impulses

This is a big reason people run out of cash all the time. A lot of people don’t buy or spend to satisfy a need, they spend based on influencers and that’s a sure reason why people constantly go broke. Spending on reasons like love, pride, boredom, entertainment etc. These are just impulse based spending, and if they do satisfy any need whatsoever, it just doesn’t last or worth it.

A better approach is to objectively evaluate each and every time you want to spend your money on anything at all. Think more on the need and cost, check if there are better alternatives, and also make post evaluation on whether or not you felt you made the right choice and learn from it.

It won’t be easy having total control over your spending, but discipline is required here. The good news, you can actually grow your discipline by starting with and following through simple decisions you make. Then, rinse and repeat. Keep making decisions and following them through.

3. Lack of a Well-planned Budget

Without a reasonable plan, you’re bound to spend on frivolous things only to later realize you haven’t satisfied the very important ones. Have a notepad or something to write down your every expenses, be able to track what exactly you spend your money on and be able to draw out a budget on what you need, so that when the money comes, you have a plan to follow and won’t be swayed by emotions which have uncanny ways of making you feel you have the cash and zero responsibilities or pressing needs to satisfy.

That’s what emotions do, deceive you into thinking “the pressing needs are here and now, the future would take care of itself,” and sadly, it doesn’t, you do! Take an active step into planning yourself and not just spending on anything that comes.

2. Tips for gaining control over your finances

We’ve talked about understanding why you go broke. And if you were able to discover some patterns or bad habits that cost you your money, congratulations! You are 51% there towards solving your money issues. Now, here are few tips on gaining control over your money. If you notice your spending exceeds how much you earn, take active steps to cut down your expenses and;

1. Start Earning

The goal is Earnings > Expenses, that is, having your earnings greater than expenses. Start a business, work a job, trade, do something about getting more money in your pocket while you keep your expenses down.

You may still have a sponsor or guardian that sees to catering your needs, but for you to be in charge of your finances, you must learn to make money for yourself. People can be disappointing at times when it comes to money, not excluding family and close friends. So, it won’t hurt if you can at least make some few cash for yourself.

Read Also: How to become an Entrepreneur with no money or experience and How to get startup capital.

2. Understand basic Cash Flow

  1. Assets: Put money in your pocket, for example, Warren Buffet’s first business, buying a ping pong machine and putting it in someone else’s shop. People kept using the machine until he had enough money to buy another ping pong machine, a very good example of an asset. All he did was get the machine and it kept making him more money.
  2. Liabilities: Things that take money out of your pocket. You don’t need an example to get this one. Because your phones, gadgets, cars, rented apartment and more are perfect examples.
  3. Income: All you earn from either a business or job.
  4. Expenses: Money you spend.

Assets increase your income, Liabilities increase your expenses. Be able to track how much enters each of these and see to it that your Assets and Income is greater than your Liabilities and expenses.

So, I want you to do something now;

  • Write down ‘Assets’, ‘Income’, ‘Liabilities’, and ‘Expenses’.
  • Under each of them, write out whatever you make (for assets and income and what exactly fetches you the income) or spend (for liabilities and expenses and what exactly takes money out of your pocket).
  • If you notice that your liabilities are more than your assets, and your expenses are more than your income, then you have serious work to do. But if not, Congratulations, and keep pushing!

Conclusion

In summary, the goal is to cut down your expenses, spend rationally, not emotionally and earn more than you spend. It won’t be easy having to change a few stuff about how you run your life, but it’s definitely going to be worth it.

Get a small book or even a budgeting app on your mobile where you can track your spending and know what exactly is draining your cash that you need to fix. Be a master of your money, don’t be a slave to it.

James Ma

CEO at Kudicity
Hello there! I'm James Ma. Entrepreneur, teacher and musician. Founder of Kudicity and KukoPress. I would love to help you rid yourself of those things keeping the entrepreneur in you from finding true expression, and also, I am very interested in helping you build an entrepreneurial personality.
James Ma

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