Most people go through financial setbacks. They come out of nowhere and hit you when you least expect it. It’s understandable to feel sad and depressed when it happens to you. You might find yourself suddenly dealing with enormous medical expenses, or suddenly losing a job, or an emergency that alters your financial plans. Whatever the reason for your financial woes, worry not for that too, shall pass.
It can be difficult to deal with when you’re in that moment, but you can definitely come out of it as a better person through planning and strategic decisions. You might feel you’re alone, but quite a lot of people are going through a financial depression, and even research supports this. Especially during these turbulent and unpredictable times, remember that we’re all working to improve our situations.
Here’s what you can do to improve yours.
Know What You Have
First things first, it’s best to list down your sources of income. You also need to list down debts, if any. Having them on a list makes you more critical of your financial situation. You might even realize that it won’t take too much work to lift yourself off this rut.
Total all of the necessary figures: sources of income, debts, and assets that can be potentially converted to cash. Look at the things you don’t need as well. We often have several things we don’t really use but have a considerable resell value. At this point, knowing what you have and maximizing it is necessary to mitigate any future emergencies.
Recording all of this information will give you a clearer picture of your situation and help you form a battle strategy for tackling your financial problems.
Budgeting is a Skill You Need to Have
Before you create a budget, it’s best to figure out your monthly living expense. Find out the necessary expenses: from utilities to mortgage, from food to travel allowance. Knowing how much you need to function in your everyday life will help you create a realistic budget that won’t suffocate you but allow you to save money.
Once you have a definite figure for your expenses, all that’s left is to create a budget that you will abide by. It’s not good to make a stringent budget, and even in a bad financial situation, it’s best to give some ample breathing room in your monetary allocation to make sure that you won’t feel stressed and stifled.
Use an Expense Tracker
Tracking how much you spend comes hand in hand with budgeting. Luckily, there is free expense tracking software you can use to make matters easier. This allows you to follow your budget strictly and prevent yourself from overspending by knowing how much of your budget you have left.
Expense trackers are convenient as they normally come as smartphone applications that provide a visual graph of your expenses and spending habits. This will also allow you to find out what you’ve been spending on unnecessarily, letting you know if you should make any changes in your spending habits even further.
Find Other Sources of Income
It goes without saying that relying on only one source of income is a dangerous way to go. If you suddenly lose that job, you will be severely financially crippled and may have to readjust your whole financial plan.
It’s good to have multiple sources of income, whether be it through a part-time job, buying and selling items, or even through state benefits. It’s a good idea if you can qualify for any financial assistance in your area as there are several banks and local government bodies that are ready to offer a hand.
If you’re not averse to more work, you can also look for work-from-home options. And with the current trend of employment today, working from home with multiple jobs isn’t an all too impossible idea.
Learn More About Finances
Prevention is always better than cure, and that includes all kinds of situations—financial setback included. It’s best to arm yourself with the knowledge to prevent or at least avoid future financial setbacks. Learning more about finances can also help you make better financial decisions, allowing you financial freedom down the line.
You can start by reading articles about personal finance. Watch videos of experts talking about how to manage your money. You’ll find that being financially responsible isn’t such a hard thing to do nowadays. There are software, services, lectures available for your perusal.
Make it a habit to read financial websites and keep an eye out for the pay-per-click ads and other headlines. They mostly feature financial services and software that can help you.
Never stop learning how to manage your finances. Doing so can help you gain the knowledge you need, and you’ll find yourself out of that pit in no time.