5 Steps to dealing with difficult financial situations

person using laptop computer holding card

A big part of life is what happens in between everything we planned to do. These moments can be awesome to cherish, and yet they can also be moments that strike us with fear.

Difficult financial situations can happen to anyone and usually bring with it more stress than we’re willing to face. While it’s tempting to try and reason about “why me?”, it’s more important to deal with the situation and get yourself back on track!

To help you deal with difficult financial situations, we’ve listed a couple of steps you can take to get back on track! Feel welcome to share it with a friend you know will appreciate the advice.

Step 1 – Admit and take stock of where you are at

Before finding a solution for any problem, it’s important that you admit you have one. While it may be more attractive to maintain an image of ‘financial success’, the downpour of financial ruin will be less attractive. This is a time to take stock of your financial surroundings and stop allocating money to pretentious living.

Step 2 – Ask questions that will determine the source of financial pressure

Difficult financial situations can have two main causes. The first will be external and the second internal.

External causes can include things like:

  • unemployment or retrenchment
  • economic volatility
  • death or illness
  • natural disaster

Identifying which of the above has led to your financial pressure can help you prepare or find the right solution e.g. an insurance policy or extra income stream.

Internal causes usually happen due to a lack of financial planning or living with a reactive mentality when it comes to expenses. It might be possible for you to maintain a reactive financial lifestyle for quite a time, but when a source of income suddenly stops, you’ll have to deal with a difficult financial situation. It’s important to admit to poor financial planning if it is the source of your financial pressure so that you are empowered with the will to take positive steps forward.

Step 3 – Determine your plan of action

Once you’ve determined the source of financial pressure, it’s time to build a plan to get you out of your financial pitfall!

To deal with immediate cash flow problems, we suggest:

  • Taking out the right loan from a trustworthy source
  • Applying for credit
  • Borrowing responsibly from a friend or family member

The most important part is a sustainable, long-term solution. Start chipping away at your difficult financial situation by applying smart financial principles and planning.

Step 4 – Execute the plan

Now, ACT. Stop living in tomorrow and chip away at the wall in front of you by applying baby steps today. This will help you execute your plan without feeling overwhelmed all the time.

Step 5 – Change your attitude

The last piece of advice we have for dealing with difficult financial situations is to change your attitude. This means changing your gloomy perspective towards one of expectation. Once you’re taking active steps to deal with financial pressure, you have all the reason in the world to develop a positive and expectant attitude!

As we mentioned above, a proactive approach to better finances is a foundational key to being prepared when dealing with financial pitfalls. This is why we’re building a full scope financial tool to help you build a better financial future!