What Is a Financial Liability?

Do you often run out of money before your next payday? Are you out of room in your monthly budget? It’s possible that you have too many financial obligations to manage. Although some expenses are fixed, you may be able to reduce your monthly financial responsibilities and save more money with a few simple strategies. Learn more about financial liabilities, and how to help reduce them with our guide.

 

What Is a Financial Liability?

A financial liability is something for which a person or company owes money. Generally, it’s an expense that you’ve taken on as part of your budget. These can include responsibilities such as monthly car payments, insurance costs, or recurring expenses such as subscriptions. While some financial liabilities are inflexible, you can likely find ways to reduce your overall monthly expenses by carefully trimming your budget. Read more tips to track your money and cut down on spending.

 

What Does It Mean To Live Beyond Your Means?

Living beyond your means refers to a financial lifestyle in which one spends more money than they earn. A person who’s living beyond their means generally can’t afford to save money, and may be starting a dangerous cycle of debt. You can adjust your financial lifestyle and free up room in your budget by cutting out unnecessary expenses and paying down debt.

 

How Can I Eliminate Debt?

Sometimes, taking on debt is unavoidable. In fact, roughly 80% of Americans have some type of consumer debt.1 Although eliminating your debt completely may take a while, it’s one of the best ways to minimize monthly financial obligations and save more of your paycheck. Paying off debt may be easier with a strategic approach, including the debt snowball or debt avalanche methods.

 

What Is a Good Budget to Follow?

Many financial experts recommend the 50/30/20 method, but it’s important to find a budget that suits your unique situation. Those factors will include your income, pay frequency, liabilities and/or outstanding debt. If you’re unsure, it may be helpful to set a savings goal and periodically review your monthly expenses.

 

How Can I Earn Extra Money?

Another way to limit the impact of financial liabilities on your budget is to earn extra income. For help finding employment and other resources in your area, head to SpringFour, a free online platform. CashNetUSA also partners with Steady, a free mobile app that helps connect you with ways to earn supplemental income via gig work, freelance jobs, at-home assignments and more.

 

 

References

1Shift Processing. (2021). American Debt Statistics.

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About 

Bonnie is a Chicago transplant who's committed to seeing the world on a dime. As an avid news junkie with an affinity for finance, she loves to help others do more with less.

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