Financial challenges will always be a part of life like losing a job or other unexpected expenses. The sad part is that no one will be able to foresee the future and know with accuracy what will happen. If that was the case, then you would already know how much you will need for that medical operation or even that trip a year from now. You will also know the exact date on when you will lose your job and when you will be able to get a new one. But sadly, that is not the case because even those people who call themselves professional fortune tellers does not have a clue on what the future holds.
Problems with your finances are usually those that are unexpected like losing a job. The data from BLS.gov shows that the unemployment rate for May of 2015 is at 5.5% which is way lower than what it was in October of 2009 which was at 10% but slightly higher than APril 2015 of 5.4%. This just goes to show that although the effects of the Great Recession in 2009 is slowly tapering off especially with unemployment, 5.5% still reflects millions of people in the country who does not have a job.
It can be losing one you already had or simply having a hard time getting one out of the gate of your colleges or universities. There are also financial challenges that are brought about by unexpected medical needs. It can be a simple doctor’s appointment or buying an over-the-counter drug for medication or worse, some medical procedures that can easily dry up your reserve funds.
There are also significant points in your life where you lose a loved one and you get emotionally, physically and financially drained. Losing a friend or a relative can leave you devastated and the last thing you will think of is should you book that flight to get to the wake or should you chip in on the cost. You just go ahead and do it and you deal with the consequences later.
How to deal with financial problems
Your finances will take a hit for a number of reasons and it is hard to anticipate and prepare for all of them. Here are a few things to remember when you have to face challenges with your finances and you need to make sure that you survive the problem.
- Look for the positive side. It is not easy to try and look at the bright side of your problem and it takes a lot of maturity and character to look for the silver lining. If you are trying to survive a job loss or even just as simple as your car breaking down, it is hard to look for the positives in that situation. But if you take a close look into it, your car breaking down might have saved you from that trip next week with your whole family and avoided an accident. Losing that job could also force you to spend more time at home with the kids and help them with their assignment or even show up to their games. It can also be a good time to get to that DIY projects you have been planning on for months but you never had the time to get around actually doing them.
- Learn to accept your current situation. It will not help your current situation if you keep pretending that you have a problem. Acceptance is the first step in plotting out next steps, If you are not convinced that you have a financial problem, you might not be able to see past it and continue to blame other people or even situations for your predicament.
- You should know that it is not forever. You need to remind yourself that the financial challenges you experience will not last forever. Even Bankrate.com explains that you need about nine months to one year’s worth of reserve funds because that is the average number of months that you will find a new job. You will find a new job just as your car will be fixed or that card payment will soon be over. Knowing this can help you focus on the solution and the future.
- Check if there are opportunities in it. Check if you can turn the situation around and use it to your advantage. If you lost your job, why not take the opportunity to apply with the company that you want to work with. Or even better, put up your own business and be the one who will provide jobs to people. You can also see if you can spend time pursuing your passion and turn it around and be able to earn off of it.
Tips when trying to earn extra with a full time job
When you are dealing with challenge in your finances,more often than not the first thing you want to do is to increase your income to address your cash shortage. Here are a few things you might want to consider when looking for extra income.
- Do an honest self-assessment of your strengths. When you are looking for extra income outside your 9-5 job, you need to understand your strengths as well as your weakness. Once you have identified your strengths, you can then look at the things you can take up to earn extra income. If you like shopping then be a professional shopper for other people. If you love doing taxes then offer that service to family and friends.
- Free up your weekends. If you are seriously looking at adding more to your income, you might look at freeing up your weekends to do extra work. You can bake on weekends and sell them online or even cover some events with your camera to earn some cash. If you are handy around the house then your neighbors might need some help fixing windows or even the sink.
- Do something after office. Look how you can do some extra work after office to be able to handle financial challenges with more income. Does your neighbor need a tutor for their children or are there any extra work you can get near your home. The idea is to be able to balance your primary work and secondary job that one does not affect the other. Manage your time and energy well to prevent a burnout.
- Be open to change. When you start earning extra money, things might start to change and you need to be able to adjust accordingly. These changes can differ from lack of sleep to having more cash at the end of the month. Be sure to remember your goals to make good financial decisions.
How to prepare for financial emergencies
Preparing for financial problems can be challenging but you need to do it to make sure you get to soften the blow of these money emergencies. It is not usually a question of “if” but of “when.” Here are a few things to help you prepare better.
- Strengthen your reserve funds. Your reserve funds should include your emergency fund and your rainy day fund. You need to make sure that you have at least a few month’s worth of reserve to be able to manage problems as big as job loss and as small as a broken faucet at home.
- Diversify your income. It is a good idea to have other source of funds in case your primary job fails to bring in the income needed to cover the monthly budget. It can come from your baking every weekend or your photography gig every night. This is also a good way to explore your options in case you want to do something different in the future.
- Look at passive income. Passive income is where you invest your money with a high return and let it roll over month on month for years to come. This is similar to how credit card companies charge you numerous fees and interest when you miss the payments but this time around, you are the one getting the better end of the bargain.
Financial challenges will happen and the best course of action is to prepare for them ahead of time. When you get to that situation, being in the right frame of mind and choosing to look at the bright side will go a long way in getting through the problem.