Financial setbacks can be alarming, but it can happen to anyone at any given time. With the combination of ill-calculated life decisions and uncontrollable economic shifts, it is easy for people to lose their footing. This growing anxiety has been underscored by the new data from Northwestern Mutual’s 2018 Planning and Progress Study. According to this survey, 44% of the respondents see money as the top stressor among Americans.
No one is immune to financial worry no matter how we try to prepare for it. Even if you are managing your finances well, creating a budget and sticking to it and saving for retirement and emergencies, unexpected life events can have a financial impact. Loss of income, divorce, medical emergencies, accidents, and sickness can cause disparity between income and expenses. Financial troubles can strike at any time. Your best weapon is resilience. Ensuring that you can quickly regain your foothold after the financial storm will save you from falling deeper into the financial abyss.
Get Back on Track in 8 Simple Steps
The last thing you need during a financial crisis is a muddled mental state. People are more prone to reckless and rash decisions under undue stress. When faced with financial troubles, it is best to stop and consider these 8 steps to get back on track:
1. Acknowledge your current reality and assess the situation.
Resistance and denial will only prevent you from devising a strategy that will help you get out of the crisis. Accept that you are currently having financial troubles. Doing this will provide the clarity you need for assessing the depth of the problem.
2. Take responsibility and own it.
Remember that you are in this situation because of certain past decisions. In hindsight, you realize that the investment you made was not well thought out. You may also have failed to curb your impulse-buying tendencies. Lessons will only be learned if you acknowledge your mistakes.
3. Tell someone you trust about your financial situation.
It can be your spouse, parents, siblings or a trusted friend. You need someone to look at the situation through an objective Shake off the shame that goes with a downward financial crash. You know that you need help and not asking for it will only make your troubles worse.
4. Conserve your resources, control the damage, and contain the fire.
Remember that you are in survival mode now. Let go of unnecessary expenses. Downgrade your lifestyle. Let go of your coffee shop trips, pack a lunch, and use your rebates.
5. Find a way to earn (more) money.
If you are out of work, make finding a job your top priority. If you have a job but your debt is getting more difficult to contain with your current resources, focus on getting another source of income. Consider doing some freelance work or pick up a side gig that you can do in your spare time.
6. Create a plan and break down the specific steps to achieve them.
Identify short-term, mid-term and long-term goals. For instance, plan to pay off one of your credit cards in three months. Be sure to set realistic goals for yourself.
7. Take care of your health.
Eat well and exercise. Getting sick can hinder your ability to get back on your feet and reach your financial goals. Moreover, staying healthy and active keeps happy hormones flowing that can help you maintain a positive and upbeat view of life.
8. Prepare yourself for future financial setbacks.
Through past experiences, you can build mental strength that will help you develop sound financial habits and increase resilience in times of crisis.
Stress from financial troubles is real and can be overwhelming. But you have the power to recover from even the worst financial disaster. Use these 8 tips to help you on your way to recovery.