A well thought out plan is a prerequisite for reaching just about any financial goal you may have. Your plan will invariably involve making certain assumptions; both regarding things that are within your control, as well as externalities that you can do little about.
But sometimes the items outside of your control can take a turn for the worse and hit you with a financial setback. In fact, everyone is likely to paint counter these hurdles and stumbling blocks from time to time. The key is to work through them and to minimize the long-term financial damage.
Here is some banking advice and tips on how to deal with a financial setback.
Address the Current Issue Immediately. Once you’ve hit a financial setback that you didn’t plan for, your first order of business is to address the immediate consequences of that setback. The nature and scope of your response is going to depend on the type and size of setback you are facing. Obviously, larger issues are going to require more effort on your part.
Prioritize Your Response Actions. As part of your response to your financial setback, you’ll want to prioritize your various responses. First, of course, is likely to be making sure that the problem doesn’t get any worse. If the setback involves failing to meet your debt obligations, then you might choose to contact your lender to try to work out a revised repayment schedule. The next step may be to re-examine your budget to identify areas that you can change in order to strengthen your overall financial position.
Figure Out What Happened. Make sure you’re looking behind the immediate causes of your current financial setback to gain a better understanding of what exactly happened. For example, an unexpected medical expense might have been the trigger for your current setback, but the real issue may be that you didn’t have a large enough emergency fund set aside to cover the expense. So rather than simply trying to avoid future surprises (which you’ll be unable to eliminate completely), you can work on preparing yourself better for those surprises.
Consider Professional Help. If your financial problems are large then you may wish to consider seeking professional help. This might be in the form of a debt reduction service, or a debt consolidation firm. Just make sure to take a critical look at any fees or charges that may be involved so that the act of seeking help doesn’t put you in a worse financial situation.
Increase Your Emergency Fund. The purpose of an emergency fund is to help you survive unexpected financial setbacks. By increasing the size of your emergency fund you’ll be able to reduce the number of issues you have in the future.
Finally, make sure that your financial setback doesn’t cause you to act irrationally. When it comes to financial matters, the best approach is to keep a level head and find the best path to work through your problem.
A well thought out plan is a prerequisite for reaching just about any financial goal you may have. Your plan will invariably involve making certain assumptions; both regarding things that are within your control, as well as externalities that you can do little about.