‘I believe that through knowledge and discipline, financial peace is possible for all of us.’
Dave Ramsey
Life is a continuous journey. You have to keep going and try to sort things out with a positive attitude. Every person has to get into finances at some stage in life, whether to handle money for the whole family or manage self-living expenses. There are many cases wherein people suffer financial losses even when they make the most well-informed and well-intentioned decision. Other times, crises such as accidents, medical emergencies, or theft and burglary could lead to a robust financial setback for families.
In such a situation, people are left with two options;
- To let things be
- Take appropriate steps and bounce back
As you are reading, we presume you are looking to go forward with the second approach because it is more practical. Moreover, you will have the opportunity to take things into your hands and get things back on track.
But what are the appropriate steps? Let’s read on to find the answer and recover from the setback.
3 Steps Towards Financial Stability After A Setback
1. Access the situation practically and impartially
Once you are over the emotional setback and are ready to take the necessary steps, you should sit and analyse the situation. It includes understanding why and what caused such financial loss to you. It will help you pave the path forward for recovery. For instance, if you have had a theft or cyber fraud that took away all your money, you should be looking to file a report and block all your cards to prevent further loss.
Similarly, some people lose their money to medical expenses and damages as a victim in a car accident. In such cases, you can consult a car accident attorney and file a lawsuit against the responsible party. The state of the US allows the victims to claim for their economic and punitive damages to recover the losses. Accessing the situation to find a solution is the right approach that helps to begin your rebuilding journey.
2. Cut back on unnecessary expenses for sometime
Financial losses mean a gap between your net income and expenses. Therefore, one of the ways to reduce that gap is to cut back on unnecessary costs. You must sit with your family, track all the expenses, and segregate them into necessary and avoidable expenditures. You don’t need to look for significant expenses to cut back to fill the gap. Instead, cutting down on multiple small spendings can make a huge difference and promote your recovery.
These can include using multiple televisions at home or going out for frequent dinners. When you have setbacks in money, you should never rely on or think of maintaining your living standards on borrowed money. It will undoubtedly increase the burden on your shoulders, and the gap will keep growing. So, think of it as an adventure, talk it out with your family & together, and pledge to come out of the situation more substantial than before.
3. Focus on increasing your income source
Now that you have the vision to rebuild from your situation and the practical analysis, you must also have a good idea about how to fill the gap. Besides cutting down on your spending, it is also a good thing if you begin to look for multiple income sources. It is not selfish or greedy to look for ways to earn more money.
So, first, you must free yourself from the societal evil that is looking for ways to make more money is an act of the greedy. However, it is not valid. You have a family to care for, and you all struggle with finances because of the traumatic event.
Therefore, you have the right to supplement your current income. For instance, you can look for freelancing work if you are good at writing, or if you like baking, why not monetize it for your good? Also, if you have adult children at home, you can teach them to do some part-time work to collect the amount for their fees or minor monthly expenses.
Bottom Line
There is no situation in life that you can not control. Even in the hardest of times, if you keep a composed and rational approach, you can bounce back faster. Understand that you must be practical and believe that whether it was your fault or not, you can take appropriate steps to recover from the setback and bring back the financial security in your life. You can consider taking a loan only if you have a good credit score and can pay the monthly instalments without hassle. Believe, act, and grow!