Americans have been going through financial difficulties more so now than in the previous years. With some still reeling from the effects of the Great Recession in 2008, a lot has to do with the events that last year. The health crisis put almost the whole world at a standstill. It did not only challenge the healthcare industry but world economies as well.
It did not only put several hospitals and medical facilities in their absolute capacity. It also forced a lot of people to stretch out their household budget over long periods of time. For some, they realized the importance of having an emergency fund. This is true especially for those who lost their job. USA Today shares that more than two-thirds of Americans went through setbacks partly because of job loss.
Financial difficulties also came about from lower-income every month and even the drawdown on people’s reserve funds. There are some who are having a hard time simply because they do not know how to manage their finances, to begin with. If this is you, you might simply be responding to what your finances have been throwing at you for years.
Dealing with Financial Difficulties
If you are going through a tough time now, here are few simple steps to consider to help you navigate through your ordeal.
Identify what needs to be resolved
In almost any problem, the first step is always to identify what you are up against. You need to know and have a clear picture of the problem. This should be on top of your list. There are a lot of financial problems you could be trying to overcome. You cannot simply go out and try improving your finances just because you are having a hard time. The actions you will take need to solve a specific problem.
Pew Social Trends shares that about 46% of Americans are having a hard time paying their bills because of the pandemic. It is also possible that you are not able to track your payments every single month. For some, their problems have to do with uncontrollable purchases from an impulsive buying behavior. Identifying the problem should always be the first thing on your list.
Develop a plan of action
Once you identify specific financial difficulties, it is now time to develop a concrete plan of action. If you are having difficulties because you lost your job, you need to focus on replacing your lost income. It can be exploring work opportunities in other companies that might still be hiring. You can also widen your search and consider using your skills in other industries.
If your financial challenges stem from an impulsive buying behavior, it is important to get to the bottom of your buying habit. But one strategy that can help is using your time for your hobbies. It can take your mind away from unnecessary expenses. One upside is that you can also find ways to turn it into an income-positive hobby. This helps you bring in extra funds every month into your budget.
Build a working budget
One of the most effective financial tools at your disposal as you deal with and navigate through financial difficulties is your budget. Not a lot of people pay much attention to it because it is just something that has always been there. But a comprehensive budget can help guide you on how you should use your funds. You need to make sure that you adjust your budget based on your current financial situation as well as the goals you need to achieve.
If you lost your job during the pandemic, you need to make sure that you make the necessary adjustment to your budget. Remember that this is a working and flexible budget that you can adjust as you go along. The important thing is that it reflects your current situation so you know exactly where you make adjustments when needed.
Your attitude towards your problems will also affect the way you manage them. If you are already telling yourself that you cannot solve the problem, you could start believing in that statement and not put any more effort into it. On the other hand, staying positive can give you that mental boost you need to persevere through and solve your financial problems.
If you are having a difficult time facing your debt payments and you are already thinking that there is no solution to it, you might simply ignore your statements. You get them every month but rather than opening them up, you either throw them straight into the trash or delete them from your inbox without looking at the numbers.
Having a positive mindset will help push you in opening and reading those statements. Once you do, you will then have an idea of what you need to work on. The same is true for financial challenges that could come your way. You have to be optimistic that you can get past these difficulties and facing these problems with a positive attitude is a great start.
How to avoid challenges in the future
Now that you have an idea of how you can tackle your financial difficulties for the year, you can also choose to be proactive about it. This approach can help you lower the chances of getting into a difficult situation in the first place. Here are a few things that can help.
Build up your savings
If there was anything that the health crisis taught a lot of people, it was to save money for unexpected emergencies. This should not only be for replacing your TV when it breaks down or even an emergency car repair. Your emergency fund needs to be able to cover your budget even when something life-changing happens.
It can be losing a job, getting sick and needing to undergo a complicated medical procedure, or even a tragedy in the family. In all these cases, you need an emergency fund to help you sustain your budget as you focus on the issue at hand. This is why saving now for your needs in the future is an important part of being proactive against money difficulties.
Constantly review and edit your budget to get ahead of financial difficulties
As mentioned earlier, your budget is one of the most crucial tools you will ever need in managing your finances. But it is not something you set at the start of the year and revisit before the year ends. It is essential that you constantly review your budget and make the necessary changes as you go along. It needs to move with whatever changes that happen in your finances.
Learn and grow with every process
You will go through a lot of challenges with your finances regardless if there is a health crisis or not. The goal is to make sure that you learn from all these experiences and make you a smarter money manager. These difficulties are great teachers but only if you choose to see the lesson in every struggle you go through.
Financial difficulties will always be a part of your life and it is important that you learn from them. This will help you move forward and become better at managing your finances.