Published On: Wed, Aug 23rd, 2017

Surviving a Major Financial Setback

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Unfortunately, it is something that could strike anyone at any time. Just when you think everything is going completely smoothly in your life, that is when a major financial setback occurs and threatens your current lifestyle. It could be a job loss, a huge unexpected bill or disaster that was simply out of your control. Even if you feel like you are in a financially secure state, it is still a good idea to have a plan of action so you are ready to respond to every eventuality. So, let’s look closer at the ways in which you can deal with and overcome financial setbacks.

 

Have a Plan B

First of all, it is always a good idea to have a plan B so you are ready to deal with any financial setbacks that may occur. For example, if you happen to lose your job, you will be in a much stronger position if you have alternative streams of income. The internet has opened up a whole host of opportunities and it is also a good idea to diversify your own skill set so you always can provide something of value to potential employers. If you suffer some sort of injury that prevents you from doing your job, it is always useful to know about a slip and fall accident attorney, call to see if you have a case. Even if these things never happen, you still have peace of mind knowing that you are ready to deal with them in case they do.

 

Re-Evaluate Your Expenses

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Draw up an itemised list of everything that you are spending and break it down into different categories. Ultimately, what you are trying to achieve is to have an inventory of essentials and nonessentials. Most people don’t have a clear picture of where their money is going every month but this is a sure-fire way to achieve this. Some of the items that people class as necessities are actually luxuries so things like phone and cable bills are there to be slashed. And then there are the habits that you can alter as well. So, avoiding impulse buying is important, as is setting a weekly budget at actually sticking to it. If you ingrain good habits when times are good, you should find yourself with extra funds so you can weather the storm when times get tough.

 

Examine Your Assets

Over time, you are likely to have accumulated some items that you no longer have any use for but you can sell them to make some extra cash in a difficult situation. This could be anything from clothes and jewellery to tools and technology. Chances are that these won’t make you vast sums of money, so you can then start looking at bigger items like any property that you own, stocks or shares that you have or savings that you have accumulated. You may also have assets that you have never really thought about before that the internet has helped to make more valuable. In the sharing economy, people can offer out all manner of things including spare rooms, storage space, driveways or a seat in their car. It Is certainly worth looking into all of these different possibilities so you can determine the full extent of any assets you possess.

 

Look for Financial Assistance

You may find that your best course of action is to turn to the experts. Financial planners and accountants well be better placed to outline the different options you have in front of you and the different responses that you could choose. As well as helping you to manage any investments that you have, they can also give you a hand when setting up a budget. Even a single session can give you a whole host of information that you would never have considered on your own.

 

Build an Emergency Fund

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One of the most effective measures that you can take against financial setbacks is to build an emergency fund that you can draw on in difficult times. As a rule of thumb, it is a good idea to have three to six month’s salary in your savings account so you give yourself time to find a new job if you lose your current one or you can deal with any big payments that you may need to make. Try to get into a habit of putting away a percentage of your salary every month. If you receive pay increases, treat this as extra money that can be saved rather than disposable income that you don’t need to think about. As well as being a prudent approach, you will also find that this is a good stress-relieving habit and you will always find yourself with cash regardless of the situation.

 

Work to Clear Your Debt

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Before you think about savings and other investments, you should work to clear any outstanding debts that you have as these will mount up much quicker if you aren’t able to pay them off every month. Ultimately, it is a good idea to eliminate all credit cards from your life except for a single one that you can use when necessary. These days, banks are all too quick to issue credit cards to people in poor financial situations so you should be careful not to get drawn in by the offers that they use to entice you. Make sure that you have a reminder set so you always know when it is time to pay your credit card bill each month so you can avoid racking up any unnecessary charges.

Financial setbacks are something that can happen when you least expect them, so your best course of action is to be prepared and ready to take on anything that life may throw at you. If you start to prepare when times are good then you will be in a much better position when things start to get difficult.

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