If you’ve encountered a financial setback, it can seem like the end of the world.
Dealing with unforeseen financial situations is common, and you can take steps to get back on track.
If you’ve hit a few bumps in the road, take a deep breath. With a few simple tips, you’ll be on your way to regaining your financial security and confidence.
Take a look at these 4 key steps to recovering from a financial setback:
1. Take a Good Look at Your Situation
No matter how big or small your financial setback may be, some of the most important things you can do when you run into a snag are to stop, take a deep breath, and evaluate your situation.
Understanding your current situation and the factors that put you in this position will help you recover faster.
Plus, addressing your financial woes straight on can help you prevent similar issues from occurring down the line.
If you want a clear picture of your current financial state, it’s helpful to ask yourself the following questions:
- How much money are you currently making?
- How much do you have in savings?
- How much debt do you have?
- What is your current credit score?
- Which elements of your financial situation are the most time sensitive?
If you want to identify the factors that led to this setback, it’s helpful to look into your financial history and ask yourself:
- Was I spending more than I could afford?
- What could I have done to prevent this from happening?
- Did I encounter an emergency, misfortune, or unforeseen expense?
2. Make a Plan to Get Back on Track
Once you’ve evaluated your situation, it’s time to start mapping out exactly how you’re going to get back on your feet.
Recovering from a financial setback can take time, so it’s essential to make a long-term plan with a realistic timeline.
Being patient isn’t always easy, but your hard work will pay off when you have your finances back in order.
As you start to plan, consider implementing a few of the following options:
- Make a budget. If you don’t already have a budget, now is the perfect time to start tracking your expenses. If you’re trying to recover from a financial setback, your budget should look a little different than it normally would in normal times. Dedicating more money towards paying off debt and less to discretionary spending are important as you work towards regaining financial stability.
- Create a financial ‘to-do’ list. The items on your personal financial to-do list will vary depending on your circumstances, but there are a few action points you should consider adding regardless of your situation. Tacking financial to-dos like setting up a meeting with your bank, consolidating your credit card debt, or checking your credit score are small tasks that can make a huge difference.
- Increase your income. No matter what kind of financial hardship you’re facing, there’s a good chance making more money will help you recover quickly. Thankfully, in today’s world, there are plenty of ways to earn some money on the side. Whether you start a side hustle, sell items you no longer need, or start working overtime, increasing your income is a great solution for almost any financial predicament.
3. Research Resources That Can Help You
Facing a financial setback can be an isolating experience, and you may feel like you’re in it alone.
Doing some research on the resources available will not only help you feel supported, but you may also find tools that can help you dig yourself out of the financial hole.
Options like refinancing your mortgage, applying for IRS hardship status, or getting a personal loan are worth researching.
Understanding your options is crucial to being able to make strong, healthy decisions.
4. Start Moving Forward
When you’re in the midst of a financial crisis, moving forward can seem impossible. The most important thing to do is to start. The longer you delay taking action, the more potential consequences you’ll have to face.
Even if it means starting small, taking steps to remedy your situation is key.
If you’re facing financial hardship because of an unforeseen event or tragedy, accepting the situation can be difficult, but it’s important to do so in order to start moving forward.
Similarly, if you’re in a bind because of previous financial mistakes that were within your control, forgiving yourself can be difficult too.
However, learning from your mistakes and cutting yourself some slack are going to be necessary for your progress.
You’re Ready to Make a Comeback
Now that you know the 4 basic steps involved in recovering from a financial setback, it’s time to start your journey.
Whether it’s in a month, a year, or further down the line, one day you’re going to look back at this as a learning experience.
One that, despite the difficulty, helped you grow.
You’ve got this!