Life is largely about the unexpected and events such as job loss, marriage breakdown, ill health or accidents – can quickly derail your financial goals or leave you struggling to manage your finances. While it can be challenging getting your finances back on track when the bills continue to come in, it’s important to address the situation as soon as possible, understand your options and take steps to take control again.
Here are seven tips to help you come back from a financial setback:
1. Assess the situation
Identify your areas of financial stress and be realistic with yourself. Burying the problem or putting it off will only cause more long-term pain. If you have a partner, be open and honest. Sit down and discuss your financial situation so you can be on the same page and work together towards your goals.
2. Make a plan
Write down your short and long-term goals to help your focus on them. If you have a budget in place, revisit it and see if there are ways you can reduce spending or redirect funds towards paying off debts. If you don’t have a budget it’s easy to put one together by using our Budget Planner.
3. Talk to a professional
Sometimes you need to call on the experts. Finances can be overwhelming and when you don’t feel in control professionals, such as financial advisers, may be best-placed to guide you and give you some options you might not be aware of. They can help you regain control over your current situation and make plans for the future.
4. Get organised
From your budget to your bills, simply taking the time to organise your documents can improve the management of your personal finances and allow you to find and refer to things more easily.
5. Find out your options
If you are struggling to meet minimum repayments or have overdue bills you simply can’t pay, contact your creditors and billers as soon as possible to discuss payment options. The sooner you do this the better before your options are limited.
6. Start an emergency fund
When you are able, start an emergency buffer fund and set regular contributions to it. This is an amount that you set aside to cover unexpected events, such as job loss, a medical emergency, home repairs and car repairs.
7. Check your insurance
Insurance is there as a safety net to help you if an unexpected event occurs. Make sure you have an appropriate level of cover for your car, private health, home and contents and your personal insurances such as life insurance and income protection.
When experiencing any kind of stress, it’s essential to take care of your physical and mental health. Make sure you take some time to yourself when you can, whether it is going for a walk or doing something you enjoy. A healthy diet, exercise and a good sleep routine can also help you reduce your overall stress levels and boost your wellbeing.
Financial setbacks can happen to anyone and can be difficult to face. By taking a stepped, realistic approach to improving your situation and, above all, being kind to yourself, can get you back on track.