From minor setbacks to full-blown disasters, knowing how to bounce back from financial hardship is absolutely essential to protecting and controlling your personal finances. Losses, particularly financial ones, are an inconvenient fact of life, but reacting to them in a smart and proactive way can make all the difference to their overall impact. If life’s dropped a financial setback in your lap, here’s some great advice for dealing with it…
Control your Emotions and Make Smart Choices
The stress that follows a financial setback can often lead people into making rash, foolish decisions. Naturally, an unexpected financial setback, especially one that impacts your personal life like a personal injury, can leave you reeling from the shock, and stir up all kinds of difficult feelings. When our emotions are raging, it can often impede our judgment and intelligence. As hard as it may be, try to keep your gut instincts from prompting any rash, knee-jerk reactions, and keep the stream of your thoughts as rational as possible. Try to think of your financial setback more as an opportunity for growth and learning, rather than a plain and simple problem. In many cases, financial issues can offer some great ways to learn more about money, and improve your personal money habits.
Have a Problem-Solving Mentality
When they’re faced with problems, the most financially-savvy people in the world tend to face the issues directly, rather than shrinking away from them and wallowing in the stress. As hard as the issue may be on your nerves and emotions, you won’t bounce back unless you do something about the problem. When a financial setback rears its ugly head, you need to get into a problem-solving mentality, and think of the problem as the first stage of a brilliant comeback. The hole in your personal finances may seem like an insurmountable issue, but it’s absolutely essential to address it with a proactive, can-do attitude. When disaster strikes, assess the situation from an objective viewpoint, and look for ways to re-strategize your finances. You may need to re-adjust your budget, or start leveraging additional sources of income.
Draft a Plan
Adopting an optimistic, progressive attitude is important to getting out of a financial setback, but you also need to have a specific plan to deal with the circumstances. Everyone experiences setbacks, but the way we handle them can often separate the people who have a firm handle on their money from those who don’t. Whether it’s a job loss, a large, frivolous purchase, or anything else, start drafting a plan that will help you overcome the issue. The main priority of this plan should be modifying your spending habits, and using the extra money from this to tackle your setback. This can mean cutting back regular expenses until you have the wiggling room to build your emergency fund up again, or giving yourself non-negotiable barriers to keep yourself from overspending. Remember, nothing in your past will dictate the future of your finances, and you’ll always be able to make at least some positive adjustments.