As you go through life trying to put your finances in order, you will soon realize that financial setbacks will be a part of your journey. Regardless how much you prepare and try to avoid them, it will happen every now and then. This is simply because you are still human and mistakes only prove that no one is really perfect.
These setbacks usually lead to even bigger financial problems when left unattended. Moreso, when you take on the wrong mindset, it can cause extensive damage to your finances. This happens when your emotions get the best of you. You end up making bad decisions that would only lead to an even bigger financial mess to deal with.
Financial setbacks can send you in a spiral of uncontrolled debt problems which can put you in a dire predicament. It can trap you in debt and make it hard for you to climb out. As you find your current financial situation as challenging, the temptation to simply give up becomes more inviting. It seems a lot easier to simply be content and make do with your current situation.
However, there are certain mindsets and attitudes you can consider when you are faced with financial setbacks. These can help you manage and address the situation. It can even give you the chance to come out on top. The challenge is being on guard and on top of the situation. This way, it does not control you and you can make better decisions. When your encounter financial setbacks, here are a few things to remember.
Avoid knee jerk reactions
This is one of the things you have to remember when you encounter any type of financial problem. It is because more often than not, it usually makes matter worse. Take the 2008 recession for example – if you had stocks and the housing bubble burst, you might jump the gun and sell everything. However. CNBC.com shares that there are stocks that have performed pretty well post-recession.
If you would have unloaded all those stocks because of a knee-jerk reaction, you would realize the potential gains it has now. However, if you really thought about it and stuck to your investments, you should be seeing them picking up by now. The same concept can be used when you are facing financial setbacks in your life.
It is a good idea to think things through and understand the whole situation. As you get a clear picture of all sides, pros, and cons of decisions you can make, you would be in a good position to make informed decisions. This is better than being caught up in the moment and with your emotions running high, make a hasty choice that can put you deeper in trouble.
Face the problem head on
There are people who prefer to mask what the real problem is in order to sleep better at night. They beat around the bush trying to avoid the real problem. If this is you then you need to stop and face the music. Taking a look at the problem head on can be a scary and downright horrifying financial ordeal for you. However, there are some great benefits in doing this in the face of financial setbacks.
For one, it lets you understand the scope or gravity of your situation. This may be the exact situation that you dread but remember you will not be able to solve anything if you do not know what the problem is. Apart from being square with the real problem, you also get to relieve some of those financial stress off your shoulders. This is because you already dealt with the big problem and on your way to fixing it.
Identify your support system
At this point in your financial journey, it is important to identify who or where your support system will be coming from. Even Startupist.com acknowledges the importance of having a strong support system and the role it plays with entrepreneurs. As you try to take on some form of financial setback, you need to clearly identify your support group.
The most common source of support for any individual would be family and friends. The logic behind this is that they are the ones that know you the best. However, there are other people to consider. You can look at your accountant for support when you need to straighten up some numbers in your finances. You can even consider your college professor for when you need pieces of advice about your career. There are a lot of people outside your immediate family and friends that can serve as a support system when you are dealing with financial setbacks.
Look at your budget to address financial setbacks
As you navigate through your financial problem, you run the risk of focusing too much on solving it that you forget about present needs. One of the things you need to keep tabs on is your household budget. Not only do you need it to run your present financial needs, you also have to rely on it to help you get through your money problems.
Your budget does not only have to accommodate your present recurring needs. It also has to address whatever setbacks you have with your finances. This is why you have to make sure that your budget is on point and flexible enough to handle and withstand any situation.
Everyone makes mistakes
It is important to note that you should not beat yourself up when you make mistakes that affect your finances. There is not one perfect person in this world and everyone makes mistakes. Even Forbes.com explains that leaders need to make mistakes in order to learn from them. This makes them better and able to look at things in various perspectives.
This is the reason why you have to cut yourself some slack when mistakes happen. Financial setbacks will happen and the best thing to do is learn from them. This will make you a better person and help prevent the same thing from happening again. But as with anything in life, balance is important. You should not use this as a recurring excuse whenever you make mistakes. Make it a conscious effort to learn from these mistakes.
Change gears with a new vision
As you are experiencing some financial problems, it might be a good idea to reassess your financial vision or long term goals. It does not mean that you have to scrap everything and start from scratch. The idea is to look at where you can make changes to take advantage of your learnings. You might want to strategize your investments based on your losses or even adjust your timeframe on some goals
Your long term goals do not have to be a moving target. Think of it as making improvements to increase your chances of hitting your goals early
Financial setbacks will always be part of your journey. The best thing to do is to learn from your mistakes and make sure that you come out of it wiser and better. Once you let the problems consume you, there is a chance wherein you feel comfortable being in a financial misery that getting out gets harder every day.