There can be times when you go through a financial crisis. It’s a tough situation to face in life when you’re financially broke, and even harder when the crisis hits you and your loved ones in the family.
There can be many reasons for financial difficulties. It could be that you have lost your job and are unemployed for a longer period. Or, it could be your business is not doing well, and you are forced to fund it with your own money. Or, it could be you are paid low and you don’t earn enough to meet your costs and support a decent lifestyle. It could be a multitude of reasons but the financial crisis is a fact of life and a lot of people go through it at least once in a lifetime for a variety of reasons.
Being financially broke can make you depressed and put you in an unstable situation, but your response should not be to brood and succumb to the fate. While it might seem a pretty daunting task, the solution is to take up the challenge and face the crisis head-on, and as you do this, these five things will surely help you kick-start your finances all over again.
Be honest and face the situation
You made a mistake and sent your finances spiralling down. People make mistakes and while you cannot change the fact that you’re broke, you can try facing the situation and be honest about it with yourself and people around you. While avoiding such a fact might make you feel great in the short-term, you’re leading yourself to achieve nothing but misery down the road, for avoidance will only lead to further expenses to maintain your existing living standards which you obviously won’t be able to bear. So, rather than making things works, it’s probably in the best interests for you and your family to start accepting things and face the situation while temporarily changing your ways of thinking and spending for the good.
Ask for help from friends and relatives
While it might be easy to live off external help and taking debt for the time being, if you can’t figure something out soon, this eventually leads to a bad decision worsening your situation further. It’s better to be open about your situation to the near and dear ones in your life who would understand your problems and will happily help you to better your finances. Ask help from your family, friends or colleagues who can temporarily help you find some work or even help you with an interest-free loan, depending on your financial situation. Telling others will also help you swallow your pride and take the load off your head helping you make better decisions further ahead.
Don’t over-spend when some money comes in
It might be possible that while you’ve gone broke, you might be expecting some of your savings to mature or would go for premature withdrawals of your investments. When money comes in, you might feel great and even at times think, you’re once again financially stable, but remember, this money will be there temporarily and money won’t come in regularly unless you find some work. So instead of spending your investments in a vacation or going on a shopping spree (that will, of course, make you feel like you’re back in the game), be wise, and spend the money only on things that fulfill the basic necessities of your life. You can also use it to pay off your existing debts, if any, which will lower your financial burden.
Prioritise on little savings rather than your convenience
Yes, you lived your life king-size. You always filled up your shopping cart in the departmental store with stuff you didn’t really require. Also, you indulged in online shopping even when you didn’t really require to buy. You were free with your credit card usage. But right now, you won’t be able to afford such expenses that could lead you to an additional burden. For, when you’re broke, even little things make a difference. Think about saving every penny, and control that urge to use your credit card. Moreover, rather than shopping at a departmental store where you might end up spending more, use the local kirana stores to keep your expenses in check.
Start financial planning and develop a habit of savings
While you do learn from your mistakes, developing a habit of savings can avoid such circumstances of going broke. Once you get your income going all over again, keep an emergency fund at hand and try starting goal-based investments. Retool yourself with basic financial knowledge or use an expert’s advice for making such investments. Monthly investments can add great value to your personal finances and helps in avoiding such embarrassing situations.
While it’s good to have a modern lifestyle, remember not to live beyond your means for when things compound, they are likely to go from bad to worse.