Unexpected financial disasters can happen to anyone at any time. A sudden expense could hit your finances and you can be left with very little until the end of the month. This can put a huge strain on your finances and cause you great stress. Overcoming financial hardships isn’t easy, but it’s perfectly doable with the right mindset and a focused effort.
People use countless strategies to get their finances in order, but very few of them are actually effective. If you want to see some real progress with your finances, you need to aim for strategies that work. If you’re short on ideas, here are ten of the most effective ways you can overcome financial crises.
1. Identify the Underlying Problem
Before you can get down to solving problems, you first need to figure out what your problems stem from. It might seem like the most obvious first step to take, but it’s a surprisingly difficult thing to asses. Most people aren’t completely aware of what is putting the largest amount of stress on their finances. Finding the financial drain requires a bit of investigation into one’s own finances.
The most obvious culprit would be any significant change that has happened in your life recently. Changes in marital status such as divorce tend to put a lot of financial stress on both parties. Having a child might be wonderful, but it also adds a lot to your expenses, which could spell trouble for your finances. Moving out from your parent’s place is a big step towards financial independence, but it also adds a mountain of financial stress on top of your current situation.
Some problems aren’t as easily identifiable. If your bills are a little too high, you might want to check what exactly is keeping them high. If it’s the heating, you have to take a look at the insulation around your home. Electricity bills can be high due to old and inefficient lighting. Water bills could be problematic due to pipes springing a leak in the walls. Identify the problem before you proceed with your financial solutions.
2. Forget About Credit Cards
Credit cards are pretty useful tools for finances, but their use can quickly spiral out of control. Even when you’re pretty reasonable with how you use credit cards, the debts that they accrue tend to be dangerous. It’s easy to lose track of your expenses and where you spend your money when you utilize several payment methods.
Controlling your credit card expenditure would be your best bet for getting finances in order. It’s a simple solution that shows enormous positive results very quickly. It’s not your salary that determines your financial health, it’s your spending habits. Credit cards encourage easy spending and they quickly put you in the red when you aren’t careful. Worse yet, using credit cards when you’re already in a financial crisis will only leave you more vulnerable to debts and problems. Your best bet would be to put down the credit cards and use other payment methods instead.
3. Build a Budget that Works
A budget is your best weapon for combating financial problems. Think of it as a solution that will help solve everything that’s wrong with your finances. Keep in mind – it has to be a regular monthly plan in order to work.
While forming your budget, you need to make sure that you have a good idea of what your expenses are. It’s not good enough that you have a rough estimate, you need to have some exact numbers in front of you. Forming a budget is a long-term investment in your financial health and you have to know how much you can save up on a monthly basis.
Once you have all the necessary numbers written down, you can critically examine your budget for places where you can save money. Cut out the unnecessary elements and create a fund for essential needs. Ask yourself some important questions. Have you been eating out too often in the past couple of months? Are certain bills posing too much of a problem? Once you know what you’re dealing with, you can create a concrete plan for how to save a buck here and there.
4. Find Improvements in Small Steps
Finances are one are in life that is pretty unforgiving. While income can rise and fall, expenses tend to rise. You’re always going to be fighting an uphill battle with seemingly no end in sight. However, even this uphill battle can be won with small steps. Everything you do to help improve your financial situation will bring you a step closer to a relaxed and stress-free financial state. Even moving at a snail’s pace will make room for improvement as you go.
Big changes are always going to be more difficult to enact than smaller changes, which is why you have to start small. Use your budget to decide on some small-scale improvements to your finances. If you’re a hundred dollars short on your bills every month, that’s something that needs to be remedied. Come up with a plan that will leave you with an extra hundred dollars to cover that. Once you dig yourself out of the red, you can start coming up with small steps that will help you save up on funds.
5. Utilize all Available Resources
People often underestimate their potential for savings. This is especially true when it comes to the resources they have in their homes. Food is a good example. It’s easy to say that you don’t have all that much food in the fridge, even when you have a pantry full of basic ingredients. While brown rice and lettuce might not be the most fulfilling meals, they’re pretty nutritive on their own. Simple and somewhat diverse meals can be made from some of the most basic ingredients, which means you should try your best to get down to cooking. Avoid eating out entirely, if your situation allows for it. Make sure you utilize everything you have in your pantry to save up on bills for the month.
Clothing is another thing we can’t do without. It’s an essential part of our daily lives. However, most people will refresh their wardrobe every once in a while, just to keep it looking new and interesting. As harsh as it may seem, this could be considered wasteful in difficult times. Wearing old clothes can be demoralizing, but it can also be a great temporary solution that helps improve finances. The money you save up could help get you out of a rut before you know it.
6. Talk it Out
Finances take the number one spot when it comes to causes of everyday stress. People are constantly fighting to keep their money in check and this causes them quite a bit of anxiety. You have to keep in mind, having all of these feelings bottled up is only going to make you feel worse when you find yourself in a difficult financial situation. Instead of remaining silent, you should try to talk it out with your close ones. Confide in your partner about your worries or have a sit-down with your family.
If you don’t want to put pressure on your family, you can always talk to your friends. Just having someone listen can ease a big portion of the stress. It can also help you get a new perspective on your problems. Perhaps someone else is in a similar situation and they’ve found helpful tips of their own.
7. Be Upfront with Your Partner
Speaking of openness and discussions, you need to make sure your partner is always up-to-date with your finances. A lot of couples live with finances that are somewhat separate, which means it’s not uncommon for a spouse or partner to not know that their significant other is in a dire financial situation. You shouldn’t let finances become a taboo topic in your home.
Strive for complete honesty with your partner. Even when the source of financial troubles is somewhat questionable, you should still tell your partner about your problems. They might be able to provide some form of assistance, whether it’s emotional or financial support. Be honest about your mistakes and you’ll find that they’ll have a lot more understanding than you might have expected. If you expect honesty from your partner, you need to be able to provide it yourself.
8. Work on the Side
One of the best ways to get yourself out of a tough financial situation would be to increase your income. This is not a simple option, as it requires that your employer is willing to give you a raise on short notice. For most people, this option isn’t feasible and alternatives need to be found.
Finding a second income option would greatly benefit your household and give you a strong financial boost. Working more than one full-time job is something that could prove to be too stressful for some people, especially if they also have children. A more reasonable solution would be to add a secondary income in the form of a part-time job. Something you do on the side would give you extra funds to help pay the bills while not taking up too much of your time.
9. Give Yourself a Financial Boost
Many problems that are related to finances are transitory in nature. It’s not always a slow descent into financial troubles. In most cases, people with good financial track records encounter a sudden expense which leaves them in a rut. Getting out of this situation and improving finances becomes a top priority, but it’s a slow and unforgiving process.
A small financial boost could help get you out of a situation like this without much hassle. Borrowing money is a solid option for those that are confident that their finances are soon set to improve. There are lots of low rate personal loans available for different incomes that allow people to escape financial crises. You can negotiate long-term payment plans which allow you to handle your bills in a timely manner without worrying about interest catching up to you. As long as you keep your finances in check after borrowing money, you can be sure that a short-term boost can lead to a long-term positive outcome.
10. Track Your Progress
Once you’ve applied your financial strategy, you need to see how it’s performing over time. There’s no use in taking steps if they aren’t leading up to anything. Come up with a timeline for your financial goals. Measure your progress in weeks, months, and years. It’s going to give you a good idea of how well your plan does in action.
Take a look at individual goals and how they’re progressing. If your main goal is to pay off long-term bills, measure how much they’re decreasing every month. If you have an outstanding loan that needs paying off, see how many funds you can set aside every week for repayments. Having a sound strategy can help with many long-term financial goals, such as paying off a mortgage in a desirable timeframe.
Taking just a few minutes to review your progress can help motivate you to continue with your efforts to better your finances. It’s a slow and steady process, but it can prove to be very rewarding. If your strategy is proving to be ineffective, you can always evaluate it and make changes as you see fit. As long as you’re constantly paying attention to your finances, you’re not going to have too many problems with a solid plan.
Finances make up a very big part of our everyday lives. When your finances are in trouble, so are you. This is why so many people are fighting to get their finances in order so that they can live a more comfortable and carefree life. To achieve this, one needs to put in a lot of effort, especially when they find themselves in a difficult financial situation. Utilize the above tips in your financial plan and you can be sure that your finances will quickly improve.