Running Out of Money
6 ways to deal with the mid-month financial panic (and 3 ways to make sure it doesn’t happen again)
It’s mid-month. You’ve just checked your balance and it doesn’t look good. Maybe you’ve had one too many nights out. Maybe those new clothes that seemed such a bargain weren’t such a bargain after all. And perhaps that fantastic holiday was a bit more than you could really afford.
You’ve no savings, and payday seems weeks away.
Where can you get your hands on some extra money to tide you over until payday?
6 options to consider
1 — Borrow from friends or family
This can be a good option if a) they’re not short of a few quid and b) you have a history of helping each other out and - most importantly - paying each other back. If you’ve built up trust, and you’re not putting them in a difficult position, there’s no harm in asking. You could even try some kind of barter arrangement; for instance, you’ll babysit their kids twice a month for a year in exchange for the loan.
If you’re thinking of asking a friend or family member to help, make sure you put your agreement in writing and let them know how and when you’ll pay them back.
2 — Use an overdraft
Overdrafts are designed for short-term borrowing and can be a very good option but do carefully check your bank’s terms & conditions, because what you’ll pay for the joy of an overdraft facility varies. Some banks will charge daily, some monthly and for some it’ll be a set fee and/or interest on the amount you borrow for the length of time you borrow it.
3 — Use a credit card
Your credit card is a possible option as most cards give you an interest-free period before they start charging interest on your spending. If you can definitely cross-your-heart-and-hope-to-die pay it off during your interest-free period, then it’s a goer. You could pay some of your bills this way, but if you need cash, you could opt for a money transfer; your credit card company will transfer cash into your bank account and the debt will go on your card. Don’t forget to shop around, as there are some good long-term interest-free deals around but remember that you’ll be charged a fee as a percentage of the transfer amount.
Make sure you pay at the very least the minimum due on your card each month so that you don’t default. Defaulting gets you a big black mark on your credit rating and ramps up the interest that you’re charged.
Try not to get into the habit of credit card debt as it’s very easy to borrow more than you can pay back quickly. No one needs that hanging round their neck for years.
4 — Use a payday loan (hint: don’t.)
Nope. Don’t do this. There’s a reason Google banned payday lender ads and apps. Even with toxic Wonga ( 5,853% interest rate, anybody?) consigned to the Bin of Evil, there are still legal loan sharks out there who will make it easy for you to sell your freedom, self-respect and mental health for a couple of hundred quid.
5 — Join a credit union
Credit unions are the good guys. They are not-for-profit financial cooperatives that are covered by the same financial regulations as banks. They provide savings and usually low-cost loan facilities for their members. They’re owned and run by these members rather than shareholders and traditionally, the members have something in common - perhaps an industry, a local area or an employer. Find out if you’re eligible to join a credit union.
6 — Ask for a salary advance
A salary advance is a no-risk option. If you’ve checked all your employer policies and there’s no mention of salary advances, don’t be afraid to ask. Yes, it can feel a little embarrassing sending a “Please may I have some dosh upfront?” email to Carol in HR, but we bet that you won’t be the first to do so. Some employers might not have an overt salary advance policy, but most will be used to the practice - if they’re a decent employer!
(Hint: Some switched-on employers are looking for ways to give their staff a bit more control over their salary with flexible salary advances built into their salary scheme, and that’s what FlexEarn is here for! So do us a solid and put in a good word in for us.)
How to avoid that nasty surprise: 3 quick hints
The best way of avoiding the stress of no money is having a wodge of savings that you can get your hands on when you need to. But if money’s tight, how can you possibly save?
First, get your attitude right. Know that getting financially fit is in your control. You control your own attitude to finances, your behaviour and what you spend (or don’t spend). Knowing that you can build your own financial freedom is empowering.
Start Stealth Saving. Saving is fun if you don’t know you’re actually doing it, so ask your employer about Save As You Earn, or explore apps that round up your purchases to the nearest pound and transfer the change into your savings account.
Practice the Cut and Dump. Cut your spending and dump what you would have spent into your savings account. Start small - cut out that second cappuccino and dump £4.99 into your savings. Or go large - do you really use that £55-a-month gym membership? Cut the gym, go for a run instead, and dump £55 a month into your savings.
If you know your options and choose wisely, you’ll be able to manage those times when money is tight. But if you plan and practice a savings campaign, you’ll avoid those mid-month panics altogether.
Resources we like that might help you:
Martin’s Money Saving Expert: https://www.moneysavingexpert.com
Credit Unions: https://www.findyourcreditunion.co.uk/about-credit-unions/
The Money Advice Service: https://www.moneyadviceservice.org.uk/en