Quantcast

Nine tips for recovering from a financial setback

Spotlight on Finance

— Murphy’s Law states: “If something wrong can go wrong, it will go wrong, and at the worst possible time.” If you’re currently experiencing a financial setback, chances are you’re shaking your head in agreement.

However, here’s another law of probability that provides levity. It comes from the pages of quantum mechanics, and it states: “if it can happen, it will happen,” and while it doesn’t rule out the financial setbacks most of us inevitably go through, it at least accounts for the possibility and high probability of financial recovery.

photo

Anthony Lanzillo, Senior Vice President, KeyBank

The truth is, financial setbacks leave us feeling vulnerable. Whether you’re a fresh college graduate with hefty student loans or an established professional who has lost track of finances or your job, the timing is never good. But where you go from the low is up to you. More important, if you create the opportunity for recovery to happen, it’s a near statistical certainty that it will.

The following nine tips will help get you on your way.

  1. Be accountable. No one likes to admit when they’re at fault for something, especially when it involves money. If you accept the fact that you got yourself into this situation, it will only be that much easier to get yourself out of the situation. Reflect and identify what caused you to get to the financial setback you’re currently facing and think about what you could have done differently.
  2. Maintain perspective. Once you realize you’ve landed yourself in a financial slump, it doesn’t mean it’s the end of the world. Keep in mind that while your current situation may be difficult, the setback is only temporary. What’s important is for you to look at the situation and ask yourself: is this a one-time setback or is it an ongoing issue that has yet to be resolved?
  3. Move forward. If you think “why do bad things always happen to me,” you’ll remain a walking Murphy’s Law billboard. Get proactive. Work through the situation and resolve to recover. If you waste all your energy wondering why you always end up in bad situations, you won’t have any energy left to solve the problem.
  4. Seek help. If you don’t change you’re habits, understand that you’re increasing the probability that another financial setback could happen again. Seek out financial advisors to help you align your finances so you have a cushion next time you encounter financial hardship. The more knowledge you can gain now, the better off you’ll be later.
  5. Evaluate resources. It’s necessary to determine what resources you have available to you. This includes your own accounts as well as insurance and loans. Depending on your current situation, resources are available for people facing financial setbacks. Do your homework and research what’s out there. Your banker can help.
  6. Adapt realistically. When you’ve hit a financial setback, you need to accept the fact that your life has changed; you cannot live like you did when your finances were in order. Figure out what your new normal is and stabilize it.
  7. Exercise discipline. It’s not easy when you have to change the way you live due to finances. You have to cut back on spending, which often means less socializing. Evaluate what you can and can’t live without and look at the month as a whole. If you plan ahead, there’s less room for spontaneous spending and you’ll be able to keep better track of expenses.
  8. Develop goals. Now that you’ve accepted your situation and understand your life is changing—at least temporarily—it’s time to develop a strategic plan and define your financial goals. Where are you looking to be financially in the next few months? The next few years? Beyond? If you’re having difficulty meeting your financial obligations, contact creditors and negotiate a new payment plan. Most companies are willing to work with you if you’re in a financial hardship and can only afford partial payments.
  9. Stay focused. Just because you’ve found yourself in an unfortunate situation doesn’t mean you should postpone good intentions and put aside your future goals. If you can afford it, invest and save. Whether you’re putting aside $50 a month or $500 a month, you’ll be making progress and be grateful for not throwing in the towel.
0
Vote on this Story by clicking on the Icon

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment