Lessons to Learn from Financial Setbacks
We all do our best to avoid them, but financial setbacks are an unfortunate fact of life. They can be events on a national scale, like the 2008 housing crisis, or something more personal such as job loss, major illness or excessive credit card debt. And they can strike at any time, even if you’ve been financially stable for years. But no matter when or why they happen, the important thing to remember is they can lead to some valuable lessons. Here are several things we can learn from experiencing financial setbacks.
Prioritizing — There’s nothing like a financial challenge to help get priorities in order. Suddenly, the differences between wants and needs become much more clear and frivolous spending has to stop. If you’ve never kept a budget before, it’s the perfect time to start one. Knowing exactly how much money you have coming in and going out is critical during times of financial stress.
Goal Setting — Working through a financial setback takes dedication and perseverance. Setting goals will help you see the situation more clearly and formulate a plan to get back on your feet. Whether it’s getting a new job, paying down debt, selling assets, or other strategies, setting specific, measurable, time-driven goals will keep you on track.
Sacrifice — Overcoming a financial crisis can seem like all work and no play, but what you have to give up now will be worth it for the peace of mind you’ll achieve in the long run. Missing out on vacations, new cars, or the latest iPhone isn’t fun, but if it’s what you need to do to achieve your goals, your sacrifice will pay off.
Making Do — From fast food to fast fashion, we have grown accustomed to the instant gratification of getting everything we want, the moment we want it. Overcoming financial struggles means getting back to ‘making do.’ Instead of calling for takeout delivery, make a meal from food you have in the pantry or heat up some leftovers. Rather than buying new clothing or shoes because they look a little worn, do some mending, cleaning and polishing to extend their usefulness.
The Importance of Savings — If you didn’t believe it before, a financial setback proves without a doubt the importance of having money set aside for emergencies. While everyone’s emergency savings goals will vary based on their unique circumstances, a good rule of thumb is to work toward having 3-6 months of living expenses saved. Having that cushion to fall back on can help prevent a setback from becoming a crisis.
Asking for Help — Financial struggles make it easy to want to withdraw from the world, but being isolated from people who care won’t help the situation. Reach out to friends and family you trust and let them know you’re struggling so they can offer support and motivation when you’re feeling down. We can help, too! Our free Credit Counseling is the starting point to figuring out an action plan to get back on your feet.