5 steps to help you recover from a financial setback
At some point in life, almost everyone has experienced an unexpected financial setback. We lose a job, a medical emergency leaves us owing huge bills, or some other major event forces us to drain our savings.
No matter what causes the financial setback, it’s important to be honest with yourself about your situation so you can move forward and get back on track. The faster you address what needs to be done, the faster you can start the road to recovery.
You may believe your situation is unique, but it is really quite common. It’s so common, in fact, there are some key, proven steps to help you come back if and when you experience a financial setback:
You can succeed
Accept the reality of your challenge and handle it quickly and aggressively. Worrying about it or denying that it’s a problem won’t get you back on track, and delaying action is likely to make matters worse. Make a commitment to yourself that you will move forward and succeed. You will be happy you took control and made your life more rewarding.
Know your financial resources
Take inventory of all the financial resources available to you, from savings accounts to investments to insurance. If your setback was for medical reasons or a home or vehicle mishap, make sure everything has been covered appropriately by insurance. Also, if you have an emergency fund, this might be the right time to tap into it.
Set up a budget and prioritize expenses
If you don’t already have one, now is a good time to set up a budget so you know exactly what resources you have available and what debts must be paid. Look for areas where you can decrease costs, such as cutting back on cable television or dining out. Know which bills have to be paid immediately and which can possibly be delayed. Contact your creditors before bills go into collection to see if they are willing to work out a revised payment plan. It’s also best to keep insurance coverage so a minor mishap doesn’t become another major problem. By following a budget, you can track your expenses and quickly recognize where your money is going.
Take action now
Having a plan is great, but it only works if you take action. Wishful thinking won’t get you where you want to be. Consistent execution of your plan is going to be the pathway to your success. Just remember, most plans will require some adjustment along the way as you figure out what is working and what isn’t.
Seek out professional help
As you set up your recovery plan, seek out a financial counselor or your local banker to assist you and possibly help identify other resources to help you successfully regain financial stability and prosperity.