How Successful People Deal With Financial Setbacks

Success is never a straight line from where you are now to where you’d like to be in the future. Instead, it’s a bumpy road with many ups and downs, twists and turns.

Unfortunately, many of us like to trick ourselves into believing that we can somehow avoid life’s financial inevitabilities and progress blissfully towards our goals. And that’s where things can go wrong emotionally when the economic tide turns against us.

Successful people, of course, know all about life’s setbacks. That’s why they develop strategies to overcome them and bounce back as fast as they can.

Remain Calm

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When disaster strikes, it’s worth remaining calm. Facing redundancy can seem like the worst thing in the world, depending on your perspective.

Suppose, for instance, you were stuck in a dead-end job, but didn’t want to leave it because it paid the bills. Losing it could be the best thing that ever happened to you, because now you have an opportunity to explore the real value you can offer.

When you change your perspective on job loss in this way, it makes it much easier to remain calm. So what if your former employer doesn’t want your services anymore? There are plenty of enterprises out there that do!

Adopt A Problem-Solving Mentality

When a financial setback hits, it’s important to adopt what many planners call a “problem-solving mentality.”

In practice, this means seeing every aspect of your life as “provisional.”

That might sound like an odd thing to say, but it really works. If you have a nice house and car, losing your job can feel like the end of the world. You worry about how you’re going to hang onto all of the material possessions you’ve managed to accumulate.

But when you see everything you own as provisional, the odd financial setback here and there doesn’t really matter all that much. You can just sell your house and car for cheaper alternatives and get back on your financial feet that way. There will always be opportunities to earn more money in the future.

Find Somebody Who Has Been Through Money Issues Themselves

Having a financial mentor can help when facing a financial disaster. You often need an experienced person who has been through similar situations themselves and knows what to do to get out of them as painlessly as possible.

Finding such a person can often be a challenge, but you’ll almost certainly know somebody who can help.

The support you get will be primarily emotional. They’ll coach you on how to approach problems, deal with them, and then continue moving forward with your life.

They’ll point out, hopefully, that while having money is nice, it shouldn’t be a master. There’s plenty to enjoy in life on a lower income.

Start Saving Immediately

Sometimes, when you suffer a financial setback, it can be tempting to try to carry on your life as normal, hoping that a new source of money will come along. That’s a risky strategy. You never know how long you’ll be out of work or whether you’ll get a windfall.

We’d recommend that you start saving straight away. Cut back on all your unnecessary expenses and focus squarely on living as inexpensively as possible. Once you start getting into debt, it becomes harder to recover.

Regardless of your financial situation, everyone can afford to save. Even if you don’t have any disposable income, take a look at how you’re spending money right now. Chances are you’re paying for services that you don’t strictly need. Even small changes can make the difference between coming out the other side in one financial piece, and not.

Keep Your Credit Score Healthy

When facing a financial crisis, the first people to get wind of it are usually the credit rating agencies. They see that you’re struggling to make ends meet and begin hammering your credit score.

Protecting your credit score, therefore, becomes a matter of priority. It might not make much of a difference now. But in the future, a poor credit rating could make it much more expensive for you to borrow. And that’s not what you want when considering taking out a mortgage or car loan.

Here are some strategies you can use during a financial setback to maintain as much of your credit score as you can:

  1. Keep paying all essential bills on time. Don’t fall behind on your tax or utilities or you might see legal action against you.
  2. Reduce your credit utilization as much as you can. Don’t rely on endless payday loans or credit cards to pay your bills. Try to do it out of savings and income.
  3. Do not close your credit card accounts, even if you pay them off. Leave them open as a signal that you’re still interested in receiving credit in the future (even if you don’t plan on ever using it).

Put A New Plan In Place

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For many COVID-19 put a spanner in their financial works. A lot of people lost their jobs. And those who didn’t wound up with far less money by the end of the year, thanks to the crashing economy. For many, 2020 left them out of pocket.

In times like this, it’s worth thinking about why specifically you want money in the first place. It is for its own sake? Or is it for the life that you can achieve with it?

Most people are surprised to discover that a fall in their incomes doesn’t really make much of a material difference to their lives. With some exceptions, they can usually do the things that they want to do.

Putting a new plan in place that focuses less on money and more on what you actually want to do can help you get through tough times. Ideally, you want to prioritize life, not just the money building up in your accounts. This way, you can work out how you’re going to get enjoyment from your life, even if the situation appears difficult.

*collaborative post

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